New Delhi [India], May 5 (ANI): The Union Cabinet on Tuesday approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide additional credit support to businesses facing liquidity challenges due to the West Asia conflict. The scheme aims to enable a total additional credit flow of Rs 2,55,000 crore, including Rs 5,000 crore for the airline sector.

Under the scheme, the National Credit Guarantee Trustee Company Limited (NCGTC) will provide 100% credit guarantee coverage for MSMEs and 90% for non-MSMEs as well as the airline sector to Member Lending Institutions for the amount in default under the additional credit facility. 'The scheme aims to provide credit guarantee coverage of 100% for MSMEs and 90% for non-MSMEs as well as airline sector,' the Cabinet said.

The support is targeted at Micro, Small & Medium Enterprises (MSMEs) and non-MSMEs with existing working capital limits and scheduled passenger airlines with outstanding credit facilities as of March 31, 2026, provided their accounts are standard. The guarantee fee has been kept at nil to ensure easier access to credit, release said.

For MSMEs and non-MSMEs, the additional credit can go up to 20% of peak working capital utilised during Q4 FY26, capped at Rs 100 crore. For airlines, the support can be up to 100%, capped at Rs 1,500 crore per borrower, subject to specific conditions. 'The quantum of support for airlines is up to 100% (capped at Rs.1,500 crore per borrower),' the release noted.

The tenor of the loan has been set at 5 years for MSMEs and non-MSMEs, including a moratorium of 1 year, while for the airline sector it is 7 years with a moratorium of 2 years. The scheme will be applicable to all loans sanctioned up to March 31, 2027.

The press release by the Union Cabinet said the scheme is designed to help businesses tide over short-term liquidity mismatches arising from the West Asia situation. 'The scheme aims to enable businesses to tide over the challenges arising from the West Asia conflict,' it stated, adding that it will also help businesses maintain operations, protect jobs and sustain supply chains.

The initiative is expected to ensure that additional working capital needs of MSMEs and the airline sector are met by banks and financial institutions. 'By providing timely liquidity, the scheme will sustain the businesses and prevent job losses,' the Cabinet noted.

It added that the measure will also promote uninterrupted domestic production and maintain the resilience of the ecosystem during the current geopolitical uncertainty. (ANI)