Govt tells banks to ready emergency credit lines for SMEs
Wednesday - March 25, 2020 3:51 pm , Category : BUSINESS
New Delhi, March 25 (IANS) 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.The 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."More 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 borrowers.The schemes of other three banks are also similar.