New Delhi, June 12 -- Global uncertainty has started to drag micro, small, and medium enterprise (MSME) activities, with loan growth decelerating to 13 per cent year-on-year in April 2026 compared to 20 per cent in December 2025, according to a report by IIFL Capital. However, the Emergency Credit Line Guarantee Scheme (ECLGS) is expected to cushion the impact, as past schemes had improved credit activity, fund utilisation, and lowered non-performing assets (NPAs).

To tide over the challenges arising from the West Asia conflict, the government announced ECLGS 5.0 in May 2026. This latest iteration provides a 100 per cent credit guarantee coverage for loans extended to standard MSMEs, with the total quantum capped at Rs 1 billion per borr...