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Union Budget 2026: Nirmala Sitharaman allocates ₹9,000cr for GECL facility
01 Feb 2026

In the Union Budget 2026, Finance Minister Nirmala Sitharaman has allocated ₹9,000 crore under the Guaranteed Emergency Credit Line (GECL) facility.

The move is part of the Emergency Credit Line Guarantee Scheme (ECLGS), which was launched in May 2020.

It provides collateral-free government-backed loans to eligible micro, small, and medium enterprises (MSMEs) and businesses facing liquidity crises due to the COVID-19 pandemic.

ECLGS scheme details
Scheme impact

The ECLGS scheme was launched as a time-bound, fully government-guaranteed credit window to address acute liquidity stress caused by COVID-19.

It offers additional working capital loans to eligible borrowers through banks and non-banking financial companies (NBFCs), with a 100% credit guarantee cover offered by the National Credit Guarantee Trustee Company (NCGTC).

The scheme aimed to ensure that viable businesses facing sudden cash-flow shocks can access funds without fresh underwriting hurdles.

ECLGS rolled out in multiple phases
Scheme evolution

The ECLGS scheme was rolled out in multiple phases, each expanding coverage, revising the eligibility criteria, and adjusting loan limits.

While the early tranches focused mainly on MSMEs, later versions also included sectors like hospitality and tourism that were hit hardest by lockdowns.

By the time it wound down, ECLGS had become one of India's largest credit guarantee programs ever implemented.

Scheme's impact on MSMEs
Economic support

As per official NCGTC and government data, cumulative guarantees issued under ECLGS stood at around ₹3.6-3.7 lakh crore, covering some 1.19 crore borrowers.

Over 95% of these borrowers were MSMEs, highlighting the scheme's central role in supporting small enterprises during the crisis years.

The immediate impact of ECLGS was liquidity as it enabled lenders to disburse funds quickly amid high risk aversion and stressed balance sheets.