About 1.1 crore MSME accounts (45% of total MSME portfolio) will be eligible to get benefit from the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. with per account an average additional credit flow of ₹2 to 2.3 lakh, said SBI Research in a report.
Stating that the ECLGS 5.0 is particularly going to benefit the aviation sector, it said the impact of war in Middle East is twofold on aviation sector.
“First is the increase in cost of ATF, which on average accounts for 30-40% 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 the range of 35% to 52%,” it said.
“In this context, the outstanding bank credit for aviation sector as of March 2026 is Rs 52600 crore and it registered a growth of 14% YoY in March 2026. At full disbursement of ₹5000 crore for the aviation sector the proposed measure will be 9.5% of ₹52,600 crore,” it added.
According to SBI Research post the implementation of the ECLGS, bank credit to the MSME has risen sharply.
“In FY26, MSME credit grew by 27% (estimated) and taking the share of MSME credit to 18.5% in total bank credit. Moreover, their asset quality remained sound with the gross NPA ratio showing further improvement,” it said.
Speaking to media persons on Wednesday (May 6, 2026) in Mumbai Indian Bank MD & CEO Binod Kumar said that his bank would see credit growth of ₹10,000 crore to ₹12,000 crore through this scheme.
“This ECGLS scheme really has worked very well. It helped companies in the difficult times. Already I have told my people to identify accounts and proactively approach them instead of waiting for the request from them, about their eligibility as per the scheme,” he added.
Commenting on the scheme Pallavi Shrivastava, Co-Founder, Progcap said, “ECLGS 5.0 comes at a time when many MSMEs are dealing with tighter cash flow cycles and increasing uncertainty in their day-to-day operations. What really matters in such moments is timely access to working capital and the 100% guarantee structure helps unlock that by giving lenders the confidence to move faster.
“From what we see on the ground, demand for short-term, flexible credit is only increasing, and interventions like this play a critical role in helping businesses stay resilient, keep their operations running, and protect livelihoods across the value chain”, he said.
According to Gurjodhpal Singh, CEO, Tide, the ECLGS 5.0 is a timely move to support MSMEs navigating ongoing global uncertainties.
“With ₹2.55 lakh crore in additional credit and 100% guarantee support, it will help ease immediate liquidity pressures and sustain business continuity. Importantly, this also reflects a broader shift—resilience today goes beyond access to credit, with MSMEs increasingly focusing on stronger cash flow management, real-time financial visibility, and digital tools to build more stable, future-ready businesses”, he said.
Munindra Verma, CEO, M1xchange said, “ECLGS 5.0 is expected to ease credit constraints for global trade MSMEs by improving access to working capital and strengthening lender confidence through sovereign guarantees.”
“This will enable MSMEs better navigate supply-side challenges, scale operations, and enhance their competitiveness in international markets,” he said.
“At the same time, the expanded risk coverage is likely to drive higher participation from financial institutions, enabling broader credit deployment and supporting a more robust and inclusive trade finance ecosystem, while reinforcing India’s position in global supply chains,” he added.
The Central government on Tuesday (May 5, 2026) approved ECLGS 5.0. to provide additional credit facility to enable businesses to tide over the challenges arising from the West Asia conflict.
Existing standard MSMEs (100% guarantee) and non-MSMEs (including airline sector 90% guarantee) with existing working capital limits are eligible for the scheme.
The quantum of support is additional credit up to 20% of peak working capital utilised during Q4 FY26 (capped at ₹100 crore).
For airlines up to 100% (capped at Rs 1,500 crore per borrower). Government has targeted total additional credit flow of ₹2.55 lakh crore (including ₹5,000 crore for airlines).
“This timely intervention will ensure liquidity support, protect jobs, sustain supply chains, and strengthen the resilience of Indian economy,” SBI Research said.
Published – May 07, 2026 09:25 am IST
