SBT's innovative loan scheme for bus, truck operators

The State Bank of Travancore (SBT) has announced an innovative loan scheme for bus and truck operators in the state. This innovative working capital loan scheme is aimed at helping bus and truck operators here to meet expenses like road tax, insurance and other recurring expenses, a senior official with SBT told Business Standard.

A loan amount of up to Rs 2 lakh would be sanctioned to operators, who have a route permit from the Road Transport Authority, at an interest rate of 9.5 per cent. However, it comes with a clause.

According to the official, loans would be made available only to bus and truck operators who already have availed of loans from the bank. "The success rate of the loan scheme would be reviewed after six months, and if found feasible, would be extended to all bus and truck operators who apply for the loan".

Further, loans would be sanctioned only to bus and truck operators who hypothecate their vehicles to SBT. The applicant should also have two personal guarantors.

The idea to come out with this innovative working capital loan scheme follows a representation from the Palakkad Bus Operators' Association, which had sought a working capital loan for buses and truck coming under the body.

Following the announcement of the scheme, there have been enquiries on the loan scheme by bus operators associations from two North Kerala districts of Idukki and Kannur, the official said. However, there have been no queries from the southern districts so far, he added.

With most of the bus and truck operators already dependant on private financiers for their working capital needs, it remains to be seen how the SBT's innovative working capital loan scheme would prove to be successful. The review by the bank after a period of six months will decide on the fate of the scheme.