ECLGS 5.0 to benefit 1.1 crore MSME accounts with additional credit support: SBI Report

The newly approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 could potentially benefit around 1.1 crore MSME accounts, helping businesses tide over disruptions arising from the ongoing West Asia conflict, according to a report by State Bank of India (SBI). The Union Cabinet on Tuesday approved ECLGS 5.0 to provide additional working capital support to existing standard MSMEs and certain non-MSME sectors, including airlines. The report noted, "our preliminary estimates indicate that ~1.1 crore MSME accounts (~45% of total MSME portfolio) will be eligible to get benefit from the scheme with per account an average additional credit flow of Rs 2 to 2.3 lakh."

Under the scheme, eligible borrowers can avail additional credit of up to 20 per cent of peak working capital utilised during the fourth quarter of FY26, capped at Rs 100 crore. For airlines, the support can go up to 100 per cent, with a cap of Rs 1,500 crore per borrower. The government has targeted an overall additional credit flow of Rs 2.55 lakh crore under ECLGS 5.0, including Rs 5,000 crore earmarked for the aviation sector. Highlighting the likely impact of the scheme, the SBI report said, "The timely intervention will ensure liquidity support, protect jobs, sustain supply chains, and strengthen the resilience of the Indian economy."

The report added that the earlier versions of ECLGS, introduced during the Covid-19 pandemic, had played a key role in stabilising MSMEs and improving their financial health. SBI Research said the previous ECLGS schemes had helped prevent large-scale stress in the MSME sector, with at least 13.5 lakh MSME accounts saved from slipping into non-performing asset (NPA) status.


The report further observed that MSME gross NPA levels declined significantly to 3.3 per cent in September 2025 from 11 per cent in March 2020, aided by support measures including ECLGS. The aviation sector is also expected to gain substantially under ECLGS 5.0 amid rising aviation turbine fuel (ATF) prices and pressure on passenger traffic due to geopolitical tensions in West Asia.

According to the report, outstanding bank credit to the aviation sector stood at Rs 526 billion as of March 2026, registering a 14 per cent year-on-year growth. The report stated that if the entire Rs 5,000 crore allocation for aviation is disbursed, it would amount to nearly 9.5 per cent of the sector's outstanding bank credit. SBI Research also highlighted strong MSME credit growth in FY26, estimating that MSME credit expanded by around 27 per cent, raising its share in total bank credit to 18.5 per cent.