Emergency Credit Line Guarantee Scheme (ECLGS) 5.0

Why in News?

• The Government approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 on 5 May 2026 to support businesses affected by external economic disruptions and geopolitical developments.

Important Points

• Implemented by NCGTC, it aims to facilitate up to ₹2.55 lakh crore in additional credit. 
• Covers MSMEs, eligible non-MSMEs and scheduled passenger airlines. 
• Credit guarantee coverage: 100% for MSMEs and 90% for non-MSMEs and airlines. 
• MSMEs and non-MSMEs can receive additional credit up to ₹100 crore per borrower. 
• The scheme is valid until 31 March 2027 or until the ₹2.55 lakh crore guarantee limit is reached. 
• ECLGS was originally launched in 2020 under the Aatmanirbhar Bharat Package. 
• As of 20 August 2026, 6,73,979 guarantees worth ₹2,50,024 crore had been issued. 
• The scheme supports liquidity, employment, domestic production and supply-chain resilience. 
• Eligible borrowers can access the scheme through the Jan Samarth Portal.
• The scheme aims to improve access to institutional credit, support working capital needs, protect employment and ensure continuity of business operations and supply chains.

What is ECLGS 5.0?

ECLGS 5.0 provides government-backed credit guarantees to eligible borrowers so that lending institutions can provide additional working capital with lower credit risk.

The scheme covers:

• Micro, Small and Medium Enterprises (MSMEs)
• Eligible non-MSME business borrowers
• Scheduled passenger airlines

The scheme is designed to help businesses deal with liquidity pressures caused by external disruptions and maintain their operations.

How did ECLGS Evolve?

The Emergency Credit Line Guarantee Scheme (ECLGS) was originally launched in 2020 under the Aatmanirbhar Bharat package to help businesses deal with the financial impact of the COVID-19 pandemic.

ECLGS 1.0

Covered MSMEs, business enterprises, MUDRA borrowers and individual business loans. Eligible borrowers had outstanding loans of up to ₹50 crore as of 29 February 2020, with overdue amounts of up to 60 days.

ECLGS 2.0

Expanded support to 26 stressed sectors identified by the Kamath Committee and the healthcare sector. It covered borrowers with outstanding loans above ₹50 crore and up to ₹500 crore, subject to the prescribed conditions.

ECLGS 3.0

Extended support to the hospitality, travel and tourism, leisure and sports, and civil aviation sectors.

ECLGS 4.0

Focused on strengthening healthcare infrastructure during the pandemic. It covered hospitals, nursing homes, clinics, medical colleges and manufacturers of liquid oxygen and oxygen cylinders, among others. Overall, ECLGS 1.0 to 4.0 issued 1.19 crore guarantees worth ₹3.68 lakh crore. These phases ended on 31 March 2023.

Key Features of ECLGS 5.0

• Implementing agency: National Credit Guarantee Trustee Company (NCGTC).
• Target beneficiaries: MSMEs, eligible non-MSME businesses and scheduled passenger airlines.
• Additional credit: For eligible MSMEs and non-MSMEs, additional credit of up to 20% of the highest fund-based working capital outstanding during Q4 of FY 2025-26, subject to a maximum of ₹100 crore per borrower.
• Guarantee fee: No guarantee fee is charged to MSMEs under the scheme.
• Loan tenure: Generally 5 years, including a 1-year moratorium.

Credit Guarantee Coverage

• ECLGS 5.0 provides different levels of government-backed credit guarantee coverage:

Eligibility for MSMEs and Non-MSMEs

• Eligible borrowers must have existing working capital facilities from member lending institutions as of 31 March 2026.
• Their loan accounts should not have been overdue for more than 60 days.
• Borrowers who have already received additional credit under the Credit Guarantee Scheme for Exporters (CGSE) cannot receive ECLGS 5.0 assistance to the extent of the additional amount already received under CGSE.

Sectors Excluded for Eligible Non-MSMEs

Certain sectors are excluded from ECLGS 5.0 for non-MSME borrowers. These include:

• NBFCs
• Power generation, transmission and distribution
• Telecom service providers
• Sugar and ethanol
• IT companies
• Paper and paper products
• Educational institutions
• Beverages, except tea and coffee
• Tobacco

If a borrower operates in both eligible and non-eligible sectors, eligibility is determined based on the share of turnover generated from eligible sectors during FY 2025-26.

Interest Rate and Loan Terms

The scheme provides loans at regulated interest rates.

• For MSMEs, the interest rate is linked to the External Benchmark Lending Rate (EBLR).
• For eligible non-MSMEs, the rate is linked to the Marginal Cost of Funds-Based Lending Rate (MCLR).
• Lending institutions can charge up to 0.75 percentage points above the applicable benchmark, subject to an overall ceiling of 9% per annum.
• For loans provided by eligible NBFCs, the interest rate cannot exceed 13% per annum.

What is EBLR?

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.

What is MCLR?

Marginal Cost of Funds-Based Lending Rate (MCLR) is an internal reference rate used by banks to determine their minimum lending rates for different types of loans.

Support for Scheduled Passenger Airlines

ECLGS 5.0 also provides special support to eligible scheduled passenger airlines.

Eligibility

Airline businesses must have outstanding fund-based and non-fund-based credit facilities as of 31 March 2026. Their credit facilities should have been classified as standard, subject to the prescribed conditions.

Key Provisions

• Credit guarantee: 90%
• Additional credit: Up to 100% of the eligible amount
• Maximum additional credit: ₹1,500 crore per borrower
• Additional credit above ₹1,000 crore and up to ₹1,500 crore requires a proportionate equity contribution from promoters/owners.
• Loan tenure: 7 years
• Moratorium: 2 years
• Interest rate: Determined by the lending institution according to its board-approved policy.

Who are Member Lending Institutions?

Member Lending Institutions are financial institutions registered under ECLGS 5.0 to provide additional credit facilities to eligible borrowers.

They include:

• Public and private sector banks
• Small Finance Banks
• Foreign banks
• Cooperative banks
• Regional Rural Banks (RRBs)
• NBFCs
• Financial institutions

Progress of ECLGS 5.0

As of 20 August 2026, ECLGS 5.0 had recorded:

• 6,73,979 guarantees issued
• ₹2,50,024 crore in guaranteed amount
• MSMEs accounted for 97.3% of the total number of guarantees
• MSMEs accounted for 80.79% of the total guaranteed amount

These figures indicate strong participation by businesses and lending institutions under the scheme.

Access Through Jan Samarth Portal

• Eligible borrowers can access the scheme through the Jan Samarth Portal, which provides a digital platform for accessing government-backed credit schemes.
• The portal helps improve the accessibility and reach of credit support for eligible businesses.

Outreach and Awareness

The government is also conducting outreach programmes to increase awareness about ECLGS 5.0.

Phase 1

Outreach programmes were conducted at 9 locations between 20 May and 6 June 2026 through State Level Bankers' Committees (SLBCs). NCGTC, PSB Alliance, banks, industry associations and businesses participated in these programmes.

Phase 2

Outreach activities are continuing at 10 additional locations, of which 4 have already been completed.

Significance of ECLGS 5.0

ECLGS 5.0 is important for maintaining business activity during periods of economic uncertainty. It can help businesses:

• Improve liquidity
• Access additional institutional credit
• Maintain working capital
• Protect employment
• Continue domestic production
• Strengthen supply chains
• Meet short-term financial obligations
• Improve business resilience

By reducing the credit risk for lending institutions through government-backed guarantees, the scheme aims to ensure that eligible businesses continue to receive credit even during periods of external economic stress.

Conclusion

ECLGS 5.0 builds on the earlier phases of the Emergency Credit Line Guarantee Scheme. While the earlier versions primarily addressed the economic impact of COVID-19, the latest phase focuses on helping businesses manage external economic disruptions and liquidity pressures. With a target of facilitating up to ₹2.55 lakh crore of additional credit, the scheme seeks to strengthen business continuity, protect jobs and support India's economic growth.

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