SBI to provide lifeline emergency credit to coronavirus-hit borrowers

Country’s largest lender State Bank of India will provide emergency loans to existing borrowers whose operations are impacted by Coronavirus 2019 (COVID 19). The loans will be granted at 7.25 per cent (per annum) fixed rate of interest.

The ad-hoc loan facility named - COVID 19 Emergency Credit Line (CECL) is aimed at meeting the temporary liquidity mismatch arising out of covid-19, SBI said in a communication to branches.

The scheme will be in force upto June 30, 2020.

All standard accounts as on March 16, 2020 and till the date of sanction are eligible. However, standard accounts classified as Special Mention Accounts - SMA 1 (overdue between 30-60 days) and SMA2 (overdue between 61-90 days) are not eligible for availing credit facility.

The maximum loan that that could be availed under special scheme is capped at Rs 200 crore.  This loan facility shall be made available as Fund Based Limits only, SBI said. The maximum brunt of COVID19 fallout is being faced by business establishments.

Early this week SBI Chairman, Rajnish Kumar said had said that his bank was doing an assessment of the sectors such as aviation, airports tourism, small transport operators which will be negatively impacted due to Coronavirus.

SBI said the borrower can avail the sanctioned amount in one go. The facility will be considered as an exposure on the borrower. Bank will adhere to Reserve Bank of India’s prudential Norms and market mechanism for granting these ad-hoc loans.

The loans will be repayable in six equated monthly instalments after a moratorium period of six months from the date of disbursement of the loan.

The lender will not prescribe margins for these loans, However, the proposed ad-hoc limits should be covered by the market value of the stocks and receivables as per the Stock statement, SBI said.

Meanwhile, referring to global effort to soften blows, Rating agency CARE Ratings in statement said a large number of global central banks have announced emergency rate cuts and monetary policy measures since February'20.

National governments too have announced a raft of measures to soften the impact of the disruptions caused by the pandemic and enable the revival of business activity, CARE said.