Cabinet approves guarantee for Rs.2.55 lakh cr credit to MSME, non-MSME, airlines

Stressed by the West Asia crisis, the Union Cabinet on Tuesday approved the 5th edition to emergency credit line guarantee scheme (ECLGS) to support credit flow of Rs.2.55 lakh crore with up to 100 per cent government guarantee for MSME, non-MSME sectors and airlines. It will have Rs.5,000 crore separately for airlines.

It (ECLGS 5.0) reflects our commitment to supporting India s businesses, especially the MSME sector in challenging global times. By enabling additional credit flow with strong guarantee coverage, this initiative will help a wide range of sectors. Our focus remains on empowering enterprises, sustaining growth momentum and safeguarding livelihoods, Prime Minister Narendra Modi said in a social media post.

According to a government statement, the scheme aims to provide credit guarantee coverage of 100 per cent for MSMEs and 90 per cent for non-MSMEs as well as airline sector. An amount of Rs.18,100 crore has been provided to meet the obligation on account of default.

For MSME, support will be up to 20 per cent of peak working capital utilised during Q4 FY 26 with a maximum of Rs.100 crore. For airlines, the support will be 100 per cent of peak working capital utilised with a cap of Rs.1,500 crore. Tenor of such loan would be 5 years for MSMEs and non-MSMEs, and 7 years for airlines. Loans sanctioned till March 31, 2027, will be eligible for the scheme.

A senior government official said that rate of interest on MSME and non-MSME laon has been capped at 9 per cent for banks and 13 per cent for NBFC. For airlines, there will be no capping, he said while adding that Air India and Indigo will be eligible to get loan of more than Rs.1,000 crore.

www.thehindubusinessline.com, dt. 06-05-2026