ECLGS 5.0: ₹2.55 Lakh Crore Credit Guarantee Scheme
Why in the news
The West Asia crisis disrupted trade routes, oil supply and shipping, squeezing cash for import-export firms, MSMEs and airlines hit by volatile ATF prices. To limit NPAs and job losses, the Cabinet cleared the fifth round of ECLGS on 5 May 2026.
Key facts
- Target: ₹2,55,000 crore extra credit, of which ₹5,000 crore is for airlines.
- Guarantor: NCGTC, covering Member Lending Institutions (MLIs).
- Eligibility: working-capital borrowers and scheduled passenger airlines whose accounts were standard on 31 March 2026.
- First ECLGS round driven by a geopolitical crisis.
Terms at a glance
| Feature | MSMEs / non-MSMEs | Airlines |
|---|---|---|
| Guarantee cover | 100% (MSMEs), 90% (non-MSMEs) | 90% |
| Extra credit | Up to 20% of peak working capital used in Q4 FY26 | Up to 100% |
| Cap per borrower | ₹100 crore | ₹1,500 crore |
| Tenor | 5 years | 7 years |
| Moratorium | 1 year | 2 years |
Background
- ECLGS began in May 2020 under the Atmanirbhar Bharat Abhiyan to help COVID-hit businesses; versions 1.0 to 4.0 followed.
- NCGTC was incorporated in 2014 under the Companies Act and is fully owned by the Finance Ministry’s Department of Financial Services; it runs ECLGS and trustees other guarantee funds.
- A credit guarantee compensates a lender if the borrower defaults, so banks can lend to riskier borrowers without heavy collateral.
- MLIs: scheduled commercial banks, financial institutions, NBFCs and small finance banks.
- A standard account is one with timely repayments, not classified as NPA.
Exam angle
- Guarantee agency: NCGTC (not SIDBI).
- Airline terms: 90% cover, 7-year tenor with 2-year moratorium, ₹1,500 crore cap.
- Related terms: MLI, standard account, working capital, Atmanirbhar Bharat Abhiyan.