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News: The Union Cabinet approved Emergency Credit Line Guarantee Scheme 5.0 to support businesses facing liquidity stress due to the West Asia crisis.
About Emergency Credit Line Guarantee Scheme 5.0
- Emergency Credit Line Guarantee Scheme 5.0 provides government-backed additional credit support to eligible businesses facing temporary liquidity stress.
- Commencement of the Scheme: The Emergency Credit Line Guarantee Scheme was first commenced on 23.05.2020 to help businesses facing liquidity stress during Covid-19 restrictions.
- Nodal Ministry: The scheme is sponsored by the Department of Financial Services under the Ministry of Finance.
- Nodal Agency: The National Credit Guarantee Trustee Company Limited (NCGTC) acts as the nodal agency for providing guarantee coverage under the scheme.
- Aim: The scheme aims to provide guaranteed collateral free loans to eligible businesses to help them manage short-term liquidity mismatches arising from the West Asia crisis.
- Key Features of Emergency Credit Line Guarantee Scheme 5.0:
- Eligible Borrowers: MSMEs, non-MSMEs, and scheduled passenger airlines with standard accounts and existing working capital limits or outstanding credit facilities as on March 31, 2026 are eligible under the scheme.
- Guarantee Coverage: The scheme provides 100% guarantee coverage for MSMEs and 90% guarantee coverage for non-MSMEs and the airline sector through Member Lending Institutions.
- Guarantee Fee: The scheme provides guarantee coverage without charging any guarantee fee.
- Quantum of Support: Eligible borrowers can receive additional credit up to 20% of peak working capital utilized during Q4 FY26, capped at Rs.100 crore. Airlines can receive support up to 100% of outstanding credit facilities, capped at Rs.1,500 crore per borrower.
- Loan Tenor: Loans for MSMEs and non-MSMEs will have a 5-year tenor with a 1-year moratorium, while airline sector loans will have a 7-year tenor with a 2-year moratorium.
- Duration and Guarantee Cover: The scheme will remain applicable for loans sanctioned up to 31.03.2027, and the guarantee cover period will remain co-terminus with the loan tenor.
