New Delhi, May 5 (IANS). The Union Cabinet chaired by Prime Minister Narendra Modi on Tuesday approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. The objective of this scheme is to provide financial assistance to businesses affected by the West Asia crisis.
Under the new phase of this scheme, the government will provide more guarantee cover on loans given by banks through the National Credit Guarantee Trustee Company Limited.
The scheme will provide 100 percent guarantee cover for MSMEs (Micro, Small and Medium Enterprises), while 90 percent guarantee will be provided for non-MSME and airline sectors.
Its objective is that banks and financial institutions can give more loans without the fear of default and businesses can get the necessary funds.
Eligible borrowers under ECLGS 5.0 will be able to avail additional loans up to 20 per cent of their peak working capital utilization during Q4FY26. However, its maximum limit has been fixed at Rs 100 crore.
This limit has been kept quite high for the airline sector. Eligible airlines can avail loans up to 100 per cent, subject to a maximum of Rs 1,500 crore per borrower, subject to fulfillment of prescribed conditions.
The special thing about this scheme is that no guarantee fee will be charged, due to which there will be no additional burden on the borrowers.
The loan repayment period has also been made easier. The loan tenure for MSMEs and other businesses will be 5 years, in which there will be no need to repay the principal for the first 1 year.
At the same time, the loan period for airlines has been fixed at 7 years, in which a moratorium of 2 years will be given. During this period only interest will have to be paid and the principal amount will have to be repaid later.
This scheme will be applicable from the date of issue of guidelines by NCGTC till 31 March 2027.
Only those borrowers who already have working capital or other loan facilities till March 31, 2026 and whose account is in ‘Standard’ category will be able to avail this benefit.
The government hopes that the ECLGS 5.0 scheme will provide great relief to businesses facing liquidity problems due to the ongoing tension in the Middle East.
–IANS
DBP
