ECLGS 5.0: MSMEs Receive Bulk of ₹2.5 Lakh Crore Credit Guarantees

Scheme targets additional credit of up to ₹2.55 lakh crore; 6.74 lakh guarantees worth ₹2.5 lakh crore issued as of August 20

New Delhi, September 5: The Government’s Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, approved in May this year to strengthen business resilience amid external economic disruptions, has issued 6,73,979 guarantees amounting to ₹2,50,024 crore as of August 20, 2026, according to the Ministry of Finance.

The scheme, implemented by the National Credit Guarantee Trustee Company (NCGTC), provides government-backed credit guarantees to lending institutions to facilitate additional working capital for eligible businesses. It aims to enable additional credit flow of up to ₹2.55 lakh crore.

The latest phase of ECLGS covers micro, small and medium enterprises (MSMEs), eligible non-MSME business borrowers and scheduled passenger airlines, with different guarantee and credit limits prescribed for each category.

The government said the scheme is intended to help businesses manage liquidity pressures arising from external disruptions, maintain operations, preserve employment and support continuity of domestic supply chains.

MSMEs account for bulk of guarantees

MSMEs have emerged as the principal beneficiaries of ECLGS 5.0. As of August 20, they accounted for 97.3 per cent of guarantees issued by number and 80.79 per cent of the total guaranteed amount.

Under the scheme, eligible MSMEs receive 100 per cent credit guarantee coverage, while eligible non-MSME borrowers receive 90 per cent coverage. Lending institutions are not required to pay a guarantee fee.

The scheme is available to MSMEs across sectors. However, certain sectors are excluded from coverage for eligible non-MSME borrowers, including NBFCs, power generation, transmission and distribution, telecom services, sugar and ethanol, information technology, paper and paper products, educational institutions, beverages other than tea and coffee, and tobacco.

Where a business operates in both eligible and excluded sectors, eligibility is determined by the lending institution based on the proportion of turnover generated from eligible sectors during FY 2025-26.

Credit support capped at ₹100 crore for eligible businesses

For MSMEs and eligible non-MSMEs, additional credit under ECLGS 5.0 can be up to 20 per cent of the peak fund-based working capital outstanding during the fourth quarter of FY 2025-26, subject to a maximum of ₹100 crore per borrower.

Eligible borrowers must have had existing working capital facilities with Member Lending Institutions as of March 31, 2026, with loan repayments not overdue by more than 60 days.

Businesses that have already availed additional credit under the Credit Guarantee Scheme for Exporters (CGSE) are not eligible under ECLGS 5.0 to the extent of the amount already availed under the export credit guarantee scheme.

The scheme provides for regulated interest rates. For MSMEs, lending is linked to the External Benchmark Lending Rate (EBLR), while eligible non-MSMEs are charged based on the Marginal Cost of Funds-based Lending Rate (MCLR).

Lending institutions may charge up to 0.75 percentage points above the applicable benchmark, subject to an overall ceiling of 9 per cent per annum. For loans extended by eligible NBFCs, the interest rate cannot exceed 13 per cent per annum.

Loans under the scheme have a five-year tenure, including a one-year moratorium from the date of first disbursement.

Airlines receive separate support

ECLGS 5.0 also provides a separate credit guarantee framework for scheduled passenger airlines.

Eligible airlines must have had outstanding fund-based and non-fund-based credit facilities with Member Lending Institutions as of March 31, 2026, classified as standard, excluding SMA-2 accounts.

Airlines can receive 90 per cent credit guarantee coverage, with no guarantee fee payable by lending institutions.

Additional credit of up to 100 per cent can be extended, subject to a ceiling of ₹1,500 crore per borrower. Any amount above ₹1,000 crore and up to ₹1,500 crore requires a proportionate equity contribution from promoters or owners.

The interest rate for airline loans will be determined by the lending institution according to its board-approved policy. The loans will have a seven-year tenure, including a two-year moratorium.

ECLGS evolved from COVID-era support

The ECLGS was originally launched in 2020 under the Aatmanirbhar Bharat Package to provide businesses with additional credit during the economic disruption caused by the COVID-19 pandemic.

Its successive phases expanded coverage to different categories of borrowers and stressed sectors.

ECLGS 1.0 covered MSMEs, business enterprises, Mudra borrowers and individual business loans, while ECLGS 2.0 expanded support to 26 stressed sectors identified by the Kamath Committee as well as the healthcare sector.

ECLGS 3.0 extended support to the hospitality, travel and tourism, leisure and sporting and civil aviation sectors. ECLGS 4.0 subsequently focused on strengthening healthcare infrastructure and covered hospitals, nursing homes, clinics, medical colleges and manufacturers of liquid oxygen and oxygen cylinders, among others.

Together, ECLGS 1.0 to 4.0 resulted in 1.19 crore guarantees amounting to ₹3.68 lakh crore before the schemes concluded on March 31, 2023.

Scheme operational till March 2027

ECLGS 5.0 will remain operational until March 31, 2027, or until guarantees worth ₹2.55 lakh crore are issued, whichever is earlier.

Credit under the scheme is being channelled through Member Lending Institutions, including scheduled commercial banks, scheduled urban cooperative banks, financial institutions and eligible NBFCs.

The government has also undertaken outreach campaigns to increase awareness among eligible enterprises. The first phase was conducted at nine locations between May 20 and June 6 through State Level Bankers’ Committees, with participation from NCGTC, banks, PSB Alliance, industry associations and enterprises.

A second phase of outreach is under way across 10 additional locations, with four already completed.

Eligible borrowers can access the scheme through the Jan Samarth Portal, while participating banks and financial institutions are also involved in identifying and supporting eligible enterprises.

The government has positioned ECLGS 5.0 as a mechanism to improve liquidity, protect employment and strengthen supply chains at a time when geopolitical and other external economic disruptions continue to create uncertainty for businesses.