India Approves ECLGS 5.0 with Rs 2.55 Lakh Crore Credit

India's Union Cabinet approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 on Tuesday, unlocking up to Rs 2.55 lakh crore in additional credit support for micro, small, and medium enterprises (MSMEs), other businesses, and airlines strained by the West Asia crisis.

The scheme, with a government outlay of Rs 18,100 crore for guarantees, provides 100 percent coverage for MSMEs and 90 percent for non-MSMEs and airlines through the National Credit Guarantee Trustee Company Limited. It targets borrowers with standard accounts and existing working capital facilities as of March 31, 2026. Eligible businesses can access loans up to 20 percent of their peak working capital utilization in the January-March quarter of fiscal 2026, capped at Rs 100 crore each. Airlines qualify for up to 100 percent of outstanding credit facilities, limited to Rs 1,500 crore per borrower and Rs 5,000 crore overall for the sector, subject to conditions.

Loans carry flexible terms: five years with a one-year moratorium on principal for MSMEs and non-MSMEs, and seven years with a two-year moratorium for airlines. The scheme imposes no guarantee fees and caps interest rates at 9 percent for banks and...