Covid-style bailout: Centre eyes Rs 2.5-L-cr credit lifeline for MSMEs
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New Delhi: The government is considering a Rs2.5 lakh crore credit guarantee scheme to support businesses, particularly MSMEs, hit by the ongoing West Asia crisis, sources said.
The proposed scheme would provide a sovereign-backed guarantee of up to 90% on loans of as much as Rs100 crore, offering lenders protection against defaults linked to the impact of the US-Iran conflict. The guarantee would be routed through the National Credit Guarantee Trustee Company (NCGTC), a government-owned entity.
The Centre is expected to allocate around Rs17,000–18,000 crore to operationalise the programme. The initiative is likely to follow the framework of the Emergency Credit Line Guarantee Scheme (ECLGS), launched in May 2020 under the Aatmanirbhar Bharat Abhiyaan during the COVID-19 pandemic. That scheme provided 100% guarantee cover to lenders, enabling quick, collateral-free loans to businesses based on existing borrowings, with capped interest rates and no additional charges.
Officials said the earlier programme proved effective in helping firms manage cash flows, meet liabilities and resume operations during the pandemic. The fresh proposal comes amid rising economic stress triggered by geopolitical tensions in West Asia.
