COVID-19 lockdown: Banks announce emergency credit lines to bring liquidity relief

Several public sector banks have announced emergency credit lines to provide liquidity relief to borrowers impacted by the coronavirus spread related lockdown.

State Bank of India, Union Bank of India, Bank of India and Indian Bank were the first of the lot to announce these relief schemes.

State Bank of India has introduced a limited-period scheme, called the COVID Emergency Credit Line (CELC). Under this facility, borrowers can avail up to or 10 percent of the existing fund-based working capital limits for a limited period at reduced rates.

“The additional liquidity facility Covid-19 Emergency Credit Line (CECL), will provide funds up to Rs 200 crore and will be available till June 30, 2020,” SBI said in an internal circular reviewed by CNBC-TV18. Loans would be offered at an interest rate of 7.25 percent and will have a tenure of 12 months.

Union Bank of India has also launched a very similar scheme. “In wake of #coronavirus outbreak, #UnionBankofIndia unstintingly supports all its existing customers with the launch of Covid Emergency Line of Credit (CELC) which provides additional credit facilities to tide over liquidity issues” the bank tweeted. Under the scheme, Union Bank of India will also provide additional credit up to 10 percent of the corporate borrowers’ existing working capital limit at reduced interest rates that can be repaid in 12 monthly installments.

Bank of India has announced special loans for those affected by COVID, across its MSME, Corporate and Retail segments. Its corporate loan product is called COVID Emergency Support Scheme (CESS 2020) and a personal loan product is called COVID19 Personal Loan (CPL), valid up to June 30.

Under CESS 2020, corporates will be eligible for an additional 20 percent of their existing current working capital limit. For personal loan borrowers, additional loans of up to three times last drawn salary will be made available for those with accounts in Bank of India, up to a maximum limit of Rs 5 lakhs. For its existing home loan customers, 25 percent of the residual value of the Market Value of the property can be availed as an additional emergency loan. These personal loans are available at 8 percent per announced floating rates with a monthly reset.

Indian Bank has also announced 5 special emergency loans for its customers. These loans will be available to their Corporate clientele, MSMEs, Retail borrowers, Pensioners, and Self Help Groups.

IND- Covid Emergency Credit LIne (IBCECL)— will provide additional funding of up to 10 percent of the Working Capital Limits (both Fund Based and Non-Fund Based limits) with a maximum limit of Rs.100 crores. Large Corporates and Medium Enterprises that are in the Standard Category would be eligible for this loan. The loan tenor will be for 36 months with an initial moratorium of up to 6 months and would carry a fixed interest rate of 1-year MCLR. All other charges are waived.

IND- MSE Covid Emergency Loan— (INDMSE-CEL)- Additional funding of 10 percent of FBWC limits with max Rs.50 lakhs, available for all Micro and Small Enterprises and up to 60 months tenor. This is intended to meet the liquidity issues faced by Micro and Small Enterprises during the challenging time now.

IND-COVID Emergency Salary Loan – to salaried employees up to an amount equal to 20 times the latest monthly gross salary subject to a max of Rs 2 lakhs. This is to meet urgent medical and other expenditures. Concessional interest and all charges waived.

IND COVIC- Emergency Pension Loan — 15 times monthly pension subject to a max of Rs 2 lakhs, with 60 months repayment. Concessional interest and all charges waived.

SHG COVID SAHAYA LOAN. Indian Bank is servicing 1.68 lakh SHGswith more than 22 lakh women beneficiaries. To help them tide over the crisis, Indian Bank has launched this loan. Under this, each member can avail of a soft loan of Rs. 5000 I.e., Rs. 1 lakh per SHG. The loan is for 36 months with 6 months moratorium.

All these relief measures have been announced by banks in consultation with the government and Reserve Bank of India, and more banks are expected to follow suit with similar schemes.

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