The new Emergency Credit Guarantee Programme, launched by the Center in May to support small businesses facing short-term liquidity stress linked to the West Asian crisis, issued over 4,11,497 guarantees. ₹1.55 lakh crore in just two months, the Finance Ministry said on Tuesday.
The ministry said the number of guarantees issued under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 is indicative of the rapid absorption of the scheme in the lending ecosystem.
Union Cabinet approves ECLGS 5.0 with outlay on May 5, 2026 ₹Rs 18,100 crore to provide liquidity support price ₹Rs 2.55 lakh crore to micro, small and medium enterprises (MSME), aviation sector and other businesses.
The scheme is designed to reduce risk for lending institutions, enabling them to extend additional credit to borrowers, helping businesses cope with cash-flow disruptions and maintain operations.
By expanding guarantee coverage to 100% for additional MSME loans and 90% for other business sectors, the scheme has allowed financial institutions to lend more confidently, ensuring that liquidity reaches the neediest sectors.
“In line with its design intent, the scheme has hugely benefited India’s small business sector,” the statement said, adding that 98% of the guarantee has benefited MSMEs, and they also account for 82% in terms of the total guarantee amount.
The Finance Ministry said that a nationwide outreach program helped in its rapid adoption.
“The outcomes of ECLGS 5.0 reflect the government’s continued commitment to building a resilient, responsive credit ecosystem. As the scheme evolves and outreach expands, it is expected to further strengthen liquidity support for businesses, including MSMEs, and enable entrepreneurs to meet their liquidity needs in times of external challenges,” the ministry said.
ECLGS 5 allows businesses to access fund-based working capital up to 20% with a maximum limit of ₹100 Crore, and up to 100% of the maximum credit, with a limit of Rs. ₹Rs 1,500 crore for eligible passenger airlines. The scheme has 100% government guarantee for MSMEs and 90% government guarantee for non-MSMEs, with guarantee fees waived and principal payment capped.
The scheme was first launched on May 23, 2020, as part of the Atmanirbhar Bharat package to assist MSMEs and business enterprises in meeting their operational liabilities due to the disruption caused by the COVID-19 pandemic. This scheme was operational till 31 March 2023.
According to government data, the scheme has helped more than 11 million MSMEs by providing guarantees since its inception till March 31, 2023. ₹3.7 lakh crore.
While ECLGS 1.0 aims to ease liquidity problems for MSMEs, Mudra borrowers and business enterprises by covering 20% of the outstanding loans. ₹Rs 50 crore, ECLGS 2.0 targets 26 stressed sectors including healthcare, with outstanding loans among them ₹50 crore more ₹500 crores.
ECLGS 3.0 focuses on hospitality, leisure, travel, tourism and civil aviation, with up to 40% outstanding credit, and ECLGS 4.0 is targeted at hospitals, nursing homes and clinics, offering loans. ₹2 crore for on-site oxygen plants.
