₹18,100 Crore Emergency Credit Guarantee Scheme 5.0 to Support MSMEs

Under the chairmanship of Prime Minister Narendra Modi, the Union Cabinet has approved the fifth version of the Emergency Credit Line Guarantee Scheme (ECLGS 5.0).

Under this scheme, a provision of ₹18,100 crore has been made to help Micro, Small, and Medium Enterprises (MSMEs), airlines, and other companies meet their working capital requirements amid rising costs due to the West Asia crisis. This scheme was first launched in May 2020 during the COVID-19 pandemic.

Prime Minister Narendra Modi stated that the approval of ECLGS 5.0 will support businesses, especially the MSME sector, during global challenges, by empowering enterprises, sustaining growth momentum, and protecting livelihoods.

According to the official statement, the scheme will help companies continue their operations, safeguard employment, and maintain smooth supply chains, thereby supporting production and overall economic activity.

The scheme allows banks to extend more loans to businesses, affected by the West Asia crisis, by providing government-backed guarantees. In case of default, the government will cover losses through the National Credit Guarantee Trustee Company—100% for MSMEs and 90% for large firms and aviation companies. This will reduce lenders’ risk and ease cash flow problems for businesses.

Companies can avail additional credit of up to 20% of their highest working capital utilized in the March quarter of FY 2026, subject to a maximum limit of ₹100 crore.

Most companies will receive loans for a tenure of 5 years, including a 1-year moratorium period. The government guarantee will remain valid for the entire loan tenure. The scheme will apply to loans sanctioned from the date of notification until March 31, 2027.

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