New credit guarantee framework aims to assist MSMEs, and non-MSMEs and airlines sector with additional working capital access
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 with an outlay of Rs. 18,100 crores to provide additional credit support subject to terms and conditions. This scheme is designed to be a liquidity-support and credit-access measure introduced in response to external geographical and trade disruptions linked to West Asia.
Under the scheme, the National Credit Guarantee Trustee Company Limited (NCGTC) will provide credit guarantee coverage to Member Lending Institutions (MLI) for additional loans extended to eligible borrowers. The programme targets a total additional credit flow of Rs. 2,55,000 crores, including Rs. 5,000 crores earmarked for the airline sector.
The scheme provides 100% guarantee coverage for MSMEs and 90% coverage for non-MSMEs and scheduled passenger airlines. No guarantee fee will be charged under the programme.
- MSMEs & non-MSMEs: 5 year tenure from the date of first disbursement, including a 1 year moratorium period
- Airline sector: 7 year loan tenure from the date of first disbursement, including a 2 year moratorium period
- Guarantee cover: Valid for the entire duration of the loan tenure
- Scheme validity: Applicable loans to be sanctioned up to 31st March 2027
Under this plan, eligible borrowers may receive additional credit support of a maximum of 20% of peak working capital utilised during Q4 FY26, capped at Rs. 100 crores. For airlines, support may extend upto 100%, subject to specified conditions and capped at Rs. 1,500 crore per borrower.
It is intended to support enterprises affected by evolving trade and operating conditions affected by the West Asia situation, while improving access to working capital across sectors.
Source: This article is based on a press release issue by the Press Information Bureau (PIB), Government of India, regarding the approval of Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.
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