These stocks in India will benefit from ECLGS 5.0 scheme
What's the story
The Indian government's approval of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 is expected to benefit select financial and aviation stocks. The scheme, which aims to provide additional liquidity support amid disruptions caused by the West Asia crisis, targets an incremental credit of ₹2.55 lakh crore, with a dedicated window of ₹5,000 crore for the aviation sector. Let's take a look.
Beneficiary sectors
Banks, NBFCs to benefit from the scheme
Brokerage firm B&K Securities India has said that the move is sentimentally positive for banks and NBFCs as public sector banks have dominated disbursements under the earlier ECLGS schemes. Among NBFCs, lenders with strong MSME exposure like Bajaj Finance, Cholamandalam Investment and Finance Company, Shriram Finance, L&T Finance, SBFC Finance, Five-Star Business Finance, and UGRO Capital are expected to benefit the most.
Aviation beneficiaries
Airlines to gain from dedicated credit window
In the aviation sector, InterGlobe Aviation and Air India are likely to be among the top beneficiaries of the scheme's dedicated credit window. The scheme will provide extensive credit guarantee coverage with no fees, making it easier for borrowers to access funds. Prime Minister Narendra Modi said ECLGS 5.0 reflects India's commitment to supporting businesses in challenging global times.
Scheme specifics
Key features of ECLGS 5.0
The ECLGS 5.0 will remain operational until March 31, 2027, and will be implemented through the National Credit Guarantee Trustee Company. It will cover existing borrowers as of March 31, 2026, with only standard, non-NPA accounts being eligible for this scheme. MSMEs are set to get a full credit guarantee cover, while non-MSMEs and airlines get up to a maximum of 90%.
Credit extension
Additional credit limits and loan tenors
Under the new scheme, eligible borrowers can get additional credit of up to 20% of their peak working capital in Q4 FY26, subject to a cap of ₹100 crore. For airlines, the limit is even higher at up to 100% additional credit, with a ceiling of ₹1,500 crore per borrower. The loan tenors have also been structured flexibly for MSMEs/non-MSMEs (five-year tenure including one-year moratorium) and airlines (seven-year tenure with two-year moratorium).