The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 could potentially benefit about 1.1 crore MSME (micro, small and medium enterprise) accounts, leading to an incremental credit flow of ₹2.3 lakh per account, per an assessment by State Bank of India’s economic research department.
“This timely intervention will ensure liquidity support, protect jobs, sustain supply chains, and strengthen resilience of the Indian economy,” SBI’s ERD said in a note. The MSMEs that will benefit from ECLGS constitute about 45 per cent of total MSME portfolio of banks, it added.
The government is targeting total additional credit flow of ₹2.55 lakh crore (including ₹5,000 crore for airlines) under ECLGS 5.0, which is aimed at ensuring that lenders extend additional credit support to eligible business borrowers in view of West Asia situation.
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, to Member Lending Institutions (MLIs) by the National Credit Guarantee Trustee Company Ltd (NCGTC).
Exigencies, eligibility
The credit guarantee coverage is for the amount in default under the additional credit facility extended to the eligible borrowers to tide over any short-term liquidity mismatches in view of West Asia crisis.
Existing standard MSMEs (100 per cent guarantee) and non-MSMEs (including airline sector 90 per cent guarantee) with existing working capital limits are eligible for the scheme. The quantum of support is in addition up to 20 per cent of peak working capital utilised during Q4 FY26 (capped at ₹100 crore). For airlines, the quantum of support is up to 100 per cent (capped at ₹1,500 crore per borrower).
Indian Bank’s Managing Director Binod Kumar estimated an additional credit flow of ₹12,000 crore-₹15,000 crore under the ECLGS scheme.
He emphasised that earlier versions of the scheme worked well, with the claims being very low. “(Earlier versions of) ECLGS scheme really worked very well, helping companies tide over difficult times. And at the same time, guarantee claim was very minimum.
“...I have asked my people to identify MSME accounts and proactively approach them and extend benefits to eligible borrowers as per scheme,” Kumar said.
Aviation sector
SBI’s ERD underscored that ECLGS 5.0 is particularly going to benefit the aviation sector.
“The impact of the war in West Asia is two-fold on the aviation sector. First is the increase in ATF cost, which on an average accounts for 30-40 per cent of the operating costs. Second is the impact on passenger traffic that has reduced due to greater uncertainty and higher prices. But depending upon the metro city, this escalation is in 35-52 per cent range,” the report said.
In this context, the ERD noted that the outstanding bank credit for aviation sector as of March 2026 is ₹52,600 and it registered a growth of 14 per cent y-o-y in March 2026. At full disbursement of ₹5,000 crore for the aviation sector, the proposed measure will be 9.5 per cent of ₹52,600 crore.
Published on May 6, 2026