The new emergency credit guarantee programme, launched by the Centre in May to support small businesses facing short-term liquidity stress linked to the West Asian crisis, issued over 4,11,497 guarantees amounting to over ₹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 was a sign of the scheme’s rapid absorption across the lending ecosystem.
The Union cabinet on May 5, 2026, approved ECLGS 5.0 with an outlay of ₹18,100 crore to provide liquidity support worth ₹2.55 lakh crore to micro, small and medium enterprises (MSMEs), the aviation sector and other businesses.
The scheme is designed to mitigate risk for lending institutions, enabling them to extend additional credit to borrowers, thereby helping businesses tide over cash-flow disruptions and sustain operations.
By extending 100% guarantee coverage to additional MSME loans and 90% to other business segments, the scheme has allowed financial institutions to lend more confidently, ensuring liquidity reaches the needy sectors, it said.
“True to its design intent, the scheme has overwhelmingly benefited India’s small business sector,” the statement said, adding that 98% of the guarantees have benefited MSMEs, and their share in terms of the total guaranteed amount is also 82%.
The finance ministry said a nationwide outreach programme helped in its rapid adoption.
“The results from 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 the times of external challenges,” the ministry said.
ECLGS 5 allows businesses to access up to 20% of fund-based working capital, with a maximum ceiling of ₹100 crore, and up to 100% of peak credit, with a cap of ₹1,500 crore, for eligible passenger airlines. The scheme carries a 100% government guarantee for MSMEs and 90% for non-MSMEs, with guarantee fees waived and a moratorium on principal repayments.
The scheme was first launched on May 23, 2020, as part of the Aatmanirbhar Bharat package to support MSMEs and business enterprises meet their operational liabilities due to the disruption caused by the Covid-19 pandemic. The scheme was operational till March 31, 2023.
According to government data, the scheme from its inception till March 31, 2023 has helped over 11 million MSMEs by extending guarantees worth ₹3.7 lakh crore.
While ECLGS 1.0 aimed to mitigate liquidity problems for MSMEs, mudra borrowers, and business enterprises by covering 20% of outstanding credit up to ₹50 crore, ECLGS 2.0 targeted 26 stressed sectors, including healthcare, covering outstanding loans between ₹50 crore and ₹500 crore.
ECLGS 3.0 focused on hospitality, leisure, travel, tourism, and civil aviation, with up to 40% of outstanding credit, and ECLGS 4.0 aimed at hospitals, nursing homes, and clinics, offering loans up to ₹2 crore for on-site oxygen plants.
