SME Times News Bureau | 25 Mar, 2020
With the coronavirus pandemic causing nationwide lockdown and affecting
businesses, the government has decided to pitch in with its support for
the corporate sector to prevent any liquidity problems for them.
Centre has asked banks to be ready to extend emergency credit lines on
easier terms to corporate borrowers so that business activity didn't
suffer on account liquidity squeeze. It has discussed the issue with the
Reserve Bank of India (RBI).
The State Bank Of India (SBI) has
already come out with an ad hoc loan facility 'Covid-19 Emergency Credit
Line (CECL)', which is aimed at meeting the temporary liquidity
mismatch caused by Covid-19 effects.
Three other public sector
banks -- Union Bank, Indian Bank and Bank of India -- have also come out
with emergency credit lines to largely support fund needs of SMEs.
banks will come with such schemes given that small and medium
businesses are taking the brunt of lockdowns most and facing a situation
where they may have to go for massive cost cutting as well as layoffs,"
said a government source.
The SBI emergency credit line will
remain operational till June 30. A borrower can get maximum loan of Rs
200 crore or 10 per cent of the existing fund-based working capital
limits, by paying fixed 7.25 per cent interest.
The credit line
will remain open for a year and repayment starts only after six months
in six instalments. The emergency loan facility is aimed at helping MSME
The schemes of other three banks are also similar.