The government is preparing to roll out a large-scale credit support programme to help businesses manage the impact of ongoing geopolitical disruptions.
According to officials, a ₹2.5 lakh crore credit guarantee scheme is likely to be launched in the coming days. The initiative aims to support multiple sectors affected by the West Asian crisis, including aviation, MSMEs, and other businesses facing liquidity pressures.
The scheme will be an expanded version of the Emergency Credit Line Guarantee Scheme (ECLGS), which was introduced in 2020 during the Covid-19 pandemic. It is expected to offer a 90% credit guarantee through the National Credit Guarantee Trustee Company (NCGTC), ensuring that lenders are protected if borrowers default.
Officials indicated that the scheme could remain valid for 4 years, with around ₹100 crore cover allocated across different sectors and sub-sectors. “The scheme has been sent to the Cabinet, which may approve in the coming days.”
“The idea is to extend support across sectors, including aviation, MSMEs and even other businesses that are currently facing liquidity pressures. The aviation sector, in particular, requires targeted support at this stage given the impact of the ongoing Iran crisis and the resulting disruptions in routes, costs and operations,” a second government official said.
Under the earlier ECLGS framework, borrowers were not required to provide additional collateral. Interest rates were capped at 9.25% for banks and 14% for NBFCs. The scheme also included a 1-year moratorium on principal repayment, while interest payments continued.
Data from the Department of Financial Services shows that about 1.19 crore guarantees were issued under ECLGS, with nearly 1.13 crore going to MSMEs.
“The ECGLS scheme has been effective in supporting businesses during stress periods, but the current situation requires a significant scale-up. We are looking at enhancing both the scope and the overall limit of the scheme so that a larger set of sectors and enterprises can access guaranteed credit more easily,” the first official said.
The proposed expansion reflects the government’s effort to provide timely financial support and maintain economic stability amid global uncertainties.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream LinkedIn | The Mainstream Facebook | The Mainstream Youtube | The Mainstream Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.
