These stocks are likely to benefit from the ECLGS 5.0 announcement

The Centre’s approval of ECLGS 5.0 is set to put select financials and aviation stocks in focus, with banks, NBFCs and airlines emerging as key beneficiaries of the expanded credit support scheme.

The latest version of the Emergency Credit Line Guarantee Scheme comes as a response to disruptions stemming from the West Asia crisis, with the government aiming to cushion the impact on businesses through additional liquidity support.

The scheme targets ₹2.55 lakh crore in incremental credit, including a dedicated ₹5,000 crore window for the aviation sector.

Under ECLGS 5.0, the scheme will remain open until March 31, 2027, and will be implemented via the Credit Guarantee Trustee Company. It will cover existing borrowers as of March 31, 2026, with eligibility restricted to standard, non-NPA accounts.

The structure remains largely favourable for lenders. MSMEs will receive 100% credit guarantee cover, while non-MSMEs and airlines will be covered up to 90%.

Eligible borrowers can avail additional credit of up to 20% of their peak working capital levels in Q4FY26, capped at ₹100 crore. For airlines, the limit is higher, with up to 100% additional credit allowed, capped at ₹1,500 crore per borrower.

Loan tenors have also been structured to provide flexibility, with MSMEs and non-MSMEs getting a five-year tenure including a one-year moratorium, while airlines will have a seven-year tenure with a two-year moratorium.

Brokerage firm B&K Securities India sees the move as sentimentally positive for banks and NBFCs, citing that public sector banks have historically dominated disbursements under earlier ECLGS schemes.

Within NBFCs, lenders with strong MSME exposure are expected to benefit the most. These include Bajaj Finance Ltd., Cholamandalam Investment and Finance Company, Shriram Finance Ltd., L&T Finance Ltd., SBFC Finance Ltd., Five-Star Business Finance Ltd. and UGRO Capital Ltd..

On the aviation side, sources indicate that InterGlobe Aviation Ltd. and Air India are likely to be among the largest beneficiaries of the scheme’s dedicated credit window.