India Announces Emergency Credit Line Guarantee Scheme 5.0 to Support Companies Amid West Asia War

Shares of NBFC are buzzing in trade today after the government announced an Emergency Credit Line Guarantee Scheme 5.0 (ECLGS) to help companies meet working capital needs amid the challenges posed by the West Asia war.The Nifty Financial Services index gained more than 1 per cent to trade at 25,990 as of 9:30 AM. Among the constituents, Cholamandalam Investment and Finance Company, Bajaj Finance, and Shriram Finance gained more than 2 per cent each to quote at ₹1,710, ₹977, and ₹985, respectively. Jio Financial Services was up 1.2 per cent at ₹251.35.L&T Finance surged nearly 4 per cent to trade at ₹301, while Aditya Birla Capital (₹367.20), Poonawalla Fincorp (₹445), and SBFC Finance (₹94.55) were up in the range of 1 to 2 per cent.Sunny Agrawal, head of fundamental research at SBI Securities, said that the scheme is a sentimentally positive forNBFCswith strong MSME exposure as well as the aviation industry.The scheme, having an outlay of ₹18,100 crore, I&B Minister Ashwini Vaishnaw said, would help airlines and MSMEs impacted by the West Asia crisis. The scheme is expected to help in providing additional credit flow of ₹2.55 lakh crore, including ₹5,000 crore."The scheme has been brought to address the stress inMSMEand airline sectors due to the West Asia conflict," the Minister said.The scheme will remain open until March 31, 2027, and will be implemented via the National Credit Guarantee Trustee Company. It will cover existing borrowers as of March 31, 2026.Aditya Birla Capital top pick by analyst"It bodes well for NBFCs and banks with meaningful exposure to MSME lending. The scheme is expected to support credit demand and provide a sustained growth impetus for these lenders going forward," Sunny Agrawal said.Also ReadStock Market LIVE: Sensex erases gains; Nifty below 24,100; SRF shares jump 9% on strong Q4 resultSRF share price soars 9% on strong Q4, ₹2,300 crore Odisha investment planBagmane Prime Office REIT IPO fully subscribed on Day 2; check GMP, detailsVedanta soars 17% in 3 days, hits new high post demerger; more upside left?Canara, PNB, BoB, Indian Bank gain up to 3%; what's driving PSU banks?Among NBFCs, players such as Aditya Birla Capital and Poonawalla Fincorp, along with several MSME-focused banks, are likely to be key beneficiaries over the medium to long term, the analyst said."Within this space, Aditya Birla Capital remains our top pick, supported by its strong March quarter performance, which we expect to sustain over the next 2–3 years," he added.ECLGS 5.0: Salient featuresEligible borrowers:MSMEs and non-MSMEs with existing working capital limits and scheduled passenger airlines having outstanding credit facilities, as of March 31, 2026, provided their accounts are standard.Guarantee coverage:100 per cent for MSMEs and 90 per cent for non-MSMEs as well as airline sectorALSO READ:SBI Q4 results preview: Profit may drop up to 12% on treasury lossGuarantee fee:NilQuantum of support:Additional credit up to 20 per cent of peak working capital utilised duringQ4FY26(capped at ₹100 crore). For airlines up to 100 per cent (capped at ₹1,500 crore per borrower, subject to satisfying certain specific conditions).Tenor of loan:5 years from the date of first disbursement including moratorium of 1 year for MSMEs/Non MSMEs. 7 years from the date of first disbursement including moratorium of 2 years for airline sector.Vinod Nair, head of research, Geojit Investments, said that with flexible repayment terms and moratoriums, the scheme aims to ease liquidity stress from West Asia disruptions. Besides, by providing timely liquidity, the government also aims to sustain the businesses and also prevent job losses."This reduces credit risk and provisioning needs, while improving loan growth visibility for NBFCs," he said.===========Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.