New Delhi: Government of India asked banks to avail emergency credit lines on easier terms to corporate borrowers to prevent issues related to liquidity problems.
With the coronavirus pandemic causing nationwide lockdown and affecting businesses, 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
The Centre has discussed the issue with the Reserve Bank of India (RBI)and decided to pitch in with its support for the corporate sector
SBI came out with a new ad hoc loan facility 'Covid-19 Emergency Credit Line (CECL)', aimed at meeting the temporary liquidity mismatch by Covid-19 effects.
Union Bank, Indian Bank and Bank of India have also come out with emergency credit lines to largely support fund needs of SMEs.
Government expects 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
The SBI loan facility is aimed at helping MSME borrowers, with this the emergency credit line will remain operational till June 30. Lenders will get a maximum loan of Rs 200 crore or 10 percent of the existing fund-based working capital limits, by paying fixed 7.25 percent interest.
The credit line will remain open for a year and repayment starts only after six months in six instalments. The schemes of other three banks are also similar to the scheme.
