Scheme provides targeted credit guarantee support to MSMEs, eligible non-MSME businesses and scheduled passenger airlines to improve liquidity, protect jobs and strengthen supply chains
New Delhi: The Government of India has introduced the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide timely credit support to businesses facing liquidity pressures and operational challenges arising from external economic and geopolitical disruptions.
Implemented by the National Credit Guarantee Trustee Company (NCGTC), the scheme enables eligible lending institutions to extend additional working capital with the backing of government-supported credit guarantees. The initiative covers MSMEs, eligible non-MSME business borrowers and scheduled passenger airlines.
The government approved ECLGS 5.0 on May 5, 2026, with the objective of facilitating additional credit flow of up to ₹2.55 lakh crore. The scheme is designed to help businesses maintain operations, protect employment, meet short-term financial commitments and keep domestic supply chains functioning during periods of external uncertainty.
Why ECLGS 5.0 Was Introduced
Geopolitical developments and external economic shocks can disrupt supply chains, increase logistics costs and create liquidity pressures for businesses across sectors.
ECLGS 5.0 seeks to address these challenges by improving access to institutional credit. By providing government-backed guarantees to eligible lenders, the scheme is intended to reduce credit risk and encourage lenders to provide additional working capital to businesses.
The increased liquidity can help enterprises meet operational expenses and financial obligations while continuing production and employment.
Evolution of the ECLGS
The Emergency Credit Line Guarantee Scheme was originally launched in 2020 under the Aatmanirbhar Bharat package to help businesses deal with the financial disruption caused by the COVID-19 pandemic.
The earlier phases of the scheme were progressively expanded to address the needs of different sectors.
ECLGS 1.0
The first phase covered Micro, Small and Medium Enterprises (MSMEs), business enterprises, MUDRA borrowers and individual business loans.
Borrowers with outstanding loans of up to ₹50 crore as of February 29, 2020, and overdue of up to 60 days, were eligible under the specified conditions.
ECLGS 2.0
The second phase expanded the scheme to 26 stressed sectors identified by the Kamath Committee, along with the healthcare sector.
It covered borrowers with outstanding credit above ₹50 crore and up to ₹500 crore as of February 29, 2020, subject to the prescribed eligibility and overdue conditions.
ECLGS 3.0
ECLGS 3.0 extended support to sectors particularly affected by the pandemic, including:
- Hospitality
- Travel and tourism
- Leisure and sporting activities
- Civil aviation
Eligible borrowers had to meet the specified credit and overdue conditions.
ECLGS 4.0
The fourth phase focused on strengthening healthcare infrastructure during the pandemic.
Hospitals, nursing homes, clinics, medical colleges and manufacturers of liquid oxygen, oxygen cylinders and related medical infrastructure were covered under the scheme, subject to specified eligibility conditions.
From ECLGS 1.0 to ECLGS 4.0, a total of 1.19 crore guarantees amounting to ₹3.68 lakh crore were issued. These earlier phases concluded on March 31, 2023.
Key Features of ECLGS 5.0
ECLGS 5.0 will remain operational until March 31, 2027, or until guarantees amounting to ₹2.55 lakh crore are issued, whichever occurs earlier.
The scheme covers:
- Eligible MSMEs
- Eligible non-MSME business borrowers
- Scheduled passenger airline companies
Credit support is provided through scheduled commercial banks, scheduled urban cooperative banks, financial institutions and eligible NBFCs, subject to the scheme’s conditions.
Eligibility for MSMEs and Eligible Non-MSMEs
Eligible borrowers must have existing working capital facilities from member lending institutions as of March 31, 2026.
Their loan accounts should not have been overdue for more than 60 days, subject to the applicable eligibility criteria.
Borrowers who have already received additional credit under the Credit Guarantee Scheme for Exporters (CGSE) are not eligible for ECLGS 5.0 assistance to the extent of the amount already received under CGSE.
The scheme is available to MSMEs across sectors. However, certain sectors are excluded for eligible non-MSME borrowers.
These exclusions include:
- NBFCs
- Power generation, transmission and distribution
- Telecom service providers
- Sugar and ethanol
- Information technology companies
- Paper and paper products
- Educational institutions
- Beverages, except tea and coffee
- Tobacco
Where a borrower operates in both eligible and ineligible sectors, the lender will determine eligibility based on the proportion of turnover generated from eligible sectors during FY 2025-26.
100% Guarantee for Eligible MSMEs
Under ECLGS 5.0, loans extended to eligible MSMEs receive 100% credit guarantee coverage.
For eligible non-MSME borrowers, the guarantee coverage is 90%.
Importantly, MSMEs are not required to pay any guarantee fee under the scheme.
How Much Additional Credit Can Businesses Get?
The scheme provides additional credit of up to 20% of the highest fund-based working capital outstanding during the fourth quarter of FY 2025-26.
The maximum additional credit available is capped at ₹100 crore per borrower, subject to the prescribed conditions.
Interest Rate Under ECLGS 5.0
The scheme provides for lending at regulated interest rates.
For MSMEs, the lending rate will be linked to the External Benchmark Lending Rate (EBLR), while eligible non-MSMEs will be charged rates based on the Marginal Cost of Funds-Based Lending Rate (MCLR).
Lenders can charge up to 0.75 percentage point above the applicable benchmark, subject to an overall ceiling of 9% per annum.
For loans extended by eligible NBFCs, the interest rate will not exceed 13% per annum.
What is EBLR?
The External Benchmark Lending Rate (EBLR) is a benchmark used by banks for determining floating interest rates on eligible retail and micro and small enterprise loans. Lending rates are linked to an external benchmark as prescribed under the RBI’s regulatory framework.
What is MCLR?
The Marginal Cost of Funds-Based Lending Rate (MCLR) is an internal reference rate used by banks to determine their lending rates for different categories of loans.
Loan Tenure for MSMEs and Non-MSMEs
The loan tenure under the scheme will be five years from the date of first disbursement.
This includes a one-year moratorium period.
Special Support for Scheduled Passenger Airlines
ECLGS 5.0 also provides a separate support mechanism for eligible scheduled passenger airlines.
To qualify, an airline must have outstanding fund-based and non-fund-based credit facilities from member lending institutions as of March 31, 2026.
The credit facilities must have been classified as standard on that date, excluding SMA-2 accounts, subject to the prescribed conditions.
Credit Guarantee Coverage
Eligible scheduled passenger airlines will receive 90% credit guarantee coverage on loans provided under the scheme.
Additional Credit
The scheme permits additional credit of up to 100%, subject to the prescribed eligibility criteria and a maximum limit of ₹1,500 crore per borrower.
For additional assistance above ₹1,000 crore and up to ₹1,500 crore, proportional equity contribution from promoters/owners will be required.
Interest Rate and Loan Tenure
The interest rate for airline borrowers will be determined by the lending institution in accordance with its board-approved policy.
The loan tenure will be seven years from the date of first disbursement, including a two-year moratorium.
Who Are Member Lending Institutions?
Member Lending Institutions under ECLGS 5.0 are financial institutions registered under the scheme to provide additional credit facilities to eligible borrowers.
The participating institutions include:
- Public sector banks
- Private sector banks
- Small Finance Banks
- Foreign banks
- Cooperative banks
- Regional Rural Banks
- NBFCs
- Financial institutions
Their participation provides the scheme with a broad institutional network for reaching eligible businesses across different regions and sectors.
ECLGS 5.0 Records Strong Progress
ECLGS 5.0 has recorded significant progress since its launch.
As of August 20, 2026, a total of 6,73,979 guarantees had been issued under the scheme.
The total amount guaranteed had reached ₹2,50,024 crore.
MSMEs accounted for 97.3% of the total number of guarantees issued and 80.79% of the total guaranteed amount.
The figures indicate strong participation by MSMEs and significant utilisation of the credit guarantee mechanism.
Digital Access Through JanSamarth Portal
Eligible borrowers can access the scheme through the JanSamarth Portal, which provides a digital platform for accessing eligible government-backed credit schemes.
The digital mechanism is intended to make the process of accessing credit support more convenient and improve the reach of the scheme among eligible businesses.
Government Steps Up Awareness Campaign
The government is also conducting outreach programmes to increase awareness about ECLGS 5.0 among eligible borrowers.
First Phase
Between May 20 and June 6, 2026, outreach programmes were conducted at nine locations through State Level Bankers’ Committees (SLBCs).
NCGTC, PSB Alliance, banks, industry associations and enterprises participated in these programmes.
Second Phase
A second round of outreach is being conducted at 10 additional locations, with four programmes already completed.
The extensive network of banks and NBFCs is being used to ensure wider geographical and sectoral coverage.
Supporting Business Resilience and Economic Growth
ECLGS 5.0 is designed to provide businesses with access to timely institutional credit when external disruptions create liquidity and operational challenges.
By improving working capital availability, the scheme can help eligible enterprises continue operations, protect employment and maintain supply-chain continuity.
The government’s latest credit guarantee initiative builds on the experience of the earlier ECLGS phases and expands targeted support to businesses facing a changing economic environment.
With a potential additional credit flow of up to ₹2.55 lakh crore, ECLGS 5.0 is positioned as an important government-backed mechanism for strengthening business resilience and supporting India’s broader economic growth amid global uncertainty.
