The National Credit Guarantee Trustee Company (NCGTC) has informed banks that the Emergency Credit Linked Guarantee Scheme (ECLGS) 5.0, which was announced in May this year to support MSMEs and non-MSMEs affected by the West Asia war, will be implemented only as long as the ₹2.5 lakh crore guarantee cover is reached.

All its member lending institutions have been asked to sanction loans under the ECLGS 5.0 to MSMEs and non-MSMEs and apply for credit guarantee under the scheme as it will be considered on first come first served basis subject the availability of guarantee cover. “Any sanction beyond available guarantee cover shall not be admissible under the scheme”, it told the banks in a communication dated August 18, 2026.

The credit guarantees issued to MSMEs and non-MSMEs (except domestic airlines) will not exceed ₹2.5 lakh crore, it pointed out.

In an earlier communication issued on August 3, the NCGTC asked the banks to stop supporting non-MSMEs under the scheme as a substantial portion of the approved outlay was already used. Since the scheme was intended to ensure credit availability to MSMEs, fresh sanctions for non-MSMEs should not be taken up with immediate effect. All lending institutions should stop processing non-MSME loans under the ECLGS 5.0 and remaining amount would be for MSMEs, it said.

When the scheme was announced, it was to be implemented till the end of March next year.

Meanwhile, the Union Finance Ministry sought suggestions from some of the MSME associations on finance and credit support required for the MSMEs. President of the Coimbatore District Small Industries Association V. Rangaswamy said the Association has suggested increasing working capital and overdraft limits to 40 % of turnover and interest subvention support. “We need credit support as raw material prices have increased 100 % and payment cycles are stretched. The government should extend the ECLGS with another ₹2.1 lakh crore credit guarantee cover,” he said.