ECLGS 5.0 To Provide Working Capital Support To 1.1 Crore MSMEs: SBI Report

New Delhi, May 7 (KNN) The newly approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 could benefit nearly 1.1 crore micro, small and medium enterprise (MSME) accounts by providing additional working capital support, according to a report by SBI Research.

The scheme, cleared by the Union Cabinet, aims to help businesses manage disruptions arising fr0m the ongoing West Asia conflict, while also extending support to select non-MSME sectors such as aviation.

Eligibility and Credit Limits

The report stated, "Our preliminary estimates indicate that 1.1 crore MSME accounts (45 per cent of total MSME portfolio) will be eligible to get benefit fr0m the scheme with per account an average additional credit flow of Rs 2 to 2.3 lakh."

Eligible borrowers can avail additional credit of up to 20 per cent of peak working capital utilised during the fourth quarter of FY26, subject to a cap of Rs 100 crore. For airlines, the support is higher—up to 100 per cent of eligible credit, with a ceiling of Rs 1,500 crore per borrower.

The government has set a target of Rs 2.55 lakh crore in additional credit under ECLGS 5.0, including Rs 5,000 crore earmarked for the aviation sector.

Expected Economic Impact

The SBI report noted, "The timely intervention will ensure liquidity support, protect jobs, sustain supply chains, and strengthen the resilience of the Indian economy."

The aviation sector, facing pressure fr0m rising aviation turbine fuel (ATF) prices and subdued passenger demand, is also likely to benefit significantly fr0m the scheme.

Past Schemes Helped Stabilise MSMEs

According to SBI Research, earlier versions of ECLGS introduced during the COVID-19 pandemic played a crucial role in supporting MSMEs. These measures helped prevent at least 13.5 lakh accounts fr0m turning into non-performing assets (NPAs).

MSME gross NPAs declined sharply to 3.3 per cent in September 2025 fr0m 11 per cent in March 2020, reflecting improved financial health supported by such interventions.

MSME Credit Growth 

The report also highlighted robust credit growth in the MSME segment, estimating a 27 per cent expansion in FY26. This increased the sector’s share in total bank credit to 18.5 per cent.

(KNN Bureau)