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The government has approved a massive ₹2.55 lakh crore emergency credit scheme to help MSMEs and airlines survive the pressure caused by the ongoing Iran conflict. Bank Nifty gained over 1% on the back of the news while PSU banks outperformed.
Breakdown: think of this like an emergency financial cushion.
Because of rising oil prices, supply disruptions, and geopolitical tensions, many businesses are suddenly facing cash flow stress. Airlines have been hit especially hard, with fuel costs jumping sharply.
In fact, airlines had warned the government that operations could get disrupted if costs kept rising.
So the government stepped in with ECLGS 5.0, a scheme where banks can give loans with government-backed guarantees. This makes lenders more comfortable lending money even during uncertain times.
How will it work: out of the total package:
- ₹5,000 crore is specifically reserved for airlines
- MSMEs and other businesses will get the remaining support
The loans also come with easier terms like lower interest rates, no guarantee fees & repayment holiday before EMIs begin.
For airlines, repayment can stretch up to 7 years, giving them more breathing room.
This isn’t a new experiment either. A similar scheme during Covid helped over 1.1 crore MSMEs, with loans worth ₹3.7 lakh crore already disbursed.
