In a communication to banks, the Nationwide Credit score Assure Trustee Firm (NCGTC), which operates the scheme, stated: “As per pointers, the scheme is relevant to all loans sanctioned through the interval from the date of challenge of those pointers by NCGTC as much as March 31, 2027 or until ensures for an quantity of ₹2.55 trillion (together with ₹5,000 crore for home airways) are issued, whichever is earlier”.
“On this regard, we want to inform that credit score ensures issued to member lending establishments (MLIs) in direction of MSME (micro, small & medium enterprises)/non-MSME models has reached allotted ₹2.50 trillion on August 20, 2026,” it added.
A banker requesting anonymity stated the abrupt discontinuation of ECLGS 5.0 has triggered appreciable concern amongst public-sector banks (PSBs), monetary establishments (FIs) and the broader MSME lending ecosystem.
“A number of banks had already processed and sanctioned ECLGS 5.0 services for eligible debtors, contemplating their elevated working-capital req-uirements through the post-monsoon and upcoming festi- val season. For a lot of MSMEs, this era is essential for constructing stock, assembly buyer orders, managing receiv- ables and getting ready for larger seasonal demand,” he stated.
Underneath the scheme, banks conduct due diligence earlier than sanctioning loans and speaking approvals to debtors. They then generate credit score assure portal software numbers (CGPANs), which facilitate mortgage disbursement.
One other banker stated the choice to cease producing contemporary CGPANs from August 21 got here as a shock, as banks had already accomplished due diligence and communicated services to debtors.
This was accomplished after assessing working-capital necessities and acquiring sanctions, the banker added.
“In a number of instances, nevertheless, the method couldn’t be accomplished as much as disbursement earlier than the sudden closure of the CGPAN era window. This has created a troublesome state of affairs for each banks and debtors. Debtors who have been knowledgeable concerning the sanctioned facility could now face a funding hole exactly when their working-capital requirement is predicted to extend,” he stated.
An e mail question despatched to the finance ministry remained unanswered till the time of going to press.
On July 7, the finance ministry stated in a press release that 4,11,497 ensures had been issued beneath ECLGS 5.0 since its launch, with the assured quantity reaching ₹1.55 trillion — “an indication of the scheme’s speedy absorption throughout the lending ecosystem.”
In a communication dated August 3, NCGTC indicated that solely eligible MSME debtors can be lined beneath the scheme. Subsequently, on August 18, banks have been knowledgeable that each SME and non-SME debtors can be lined on a first-in-first-out (FIFO) foundation, topic to relevant circumstances.
“Nonetheless, inside a really brief interval thereafter, the era of contemporary CGPANs was stopped from August 21, and MLIs have been suggested to cease additional funding beneath ECLGS 5.0. Such an abrupt change has made it troublesome for banks to align their credit score choices, borrower commitments and operational processes with the scheme framework. Banks want ample time to speak adjustments to branches and debtors, full sanctioned transactions and handle commitments already created beneath the prevailing framework,” a 3rd banker stated.
VK Agarwal, former president of the Federation of Indian Micro and Small & Medium Enterprises (FISME), stated terminating the scheme sends a unfavourable sign to MSMEs. “The truth that the assure quantity has been exhausted in lower than 4 months exhibits how distressing the state of affairs is. MSMEs are sitting over extra capability and wish working capital to pay their payments and salaries. The federal government should lengthen the ECLGS 5.0 scheme with extra credit score assure,” he stated.
- Sanctioned loans caught: Banks left with undisbursed services after contemporary CGPAN era was stopped on August 21
- Demand surged: 4,11,497 ensures value ₹1.55 trillion have been issued by July 7
- Guidelines modified abruptly: Borrower eligibility widened simply days earlier than closure
- Fund squeeze for MSMEs: Closure comes forward of peak competition season working-capital wants
- Banks search extra headroom: Lenders need NCGTC allocation elevated, not the scheme scrapped
