State-run banks have stepped up with emergency funds to help companies continue operations and even pay employee salaries, as corporate borrowers frantically seek help to tide over the crisis caused by the Covid-19 pandemic, according to two people aware of the development. Banks are also relaxing repayment terms for these loans to help customers tide over the current period of uncertainty.
There are credit emergencies sanctioned by the banks like State Bank of India (SBI), Union Bank of India and Indian Bank. Bank of Baroda (BoB) and Bank of India are on the verge of taking similar steps in the coming days to hep the corporations and employers for running their businesses and paying salary to the employees amid the corona virus pandemic. The credit line of the state bank of India is 200 crore Indian Bank’s credit line is up to ₹100 crore, while that of Union Bank is up to ₹50 crore. Bank of Baroda has a plan to sanction the limit of ₹200 crore or up to 10% of the borrowers’ fund-based working capital limit, while Bank of India plans to allow a top-up of up to 20% of the working capital limit or a maximum of ₹200 crore.
As per the reports they say that they have been receiving calls from many customers asking for money telling about the conditions where they need money to keep their business running or to pay to the employers and credit lines by banks will help them tide over this crisis as much as possible. They say that they have long term relationships with many companies and they too need money to keep their business in pace and running at least slowly.
There is yet a pending approval for the plan proposed by Bank of Baroda which will then be sent to all the branches across the country in their offices says the reports. Only the existing borrowers classified as standard on the bank’s books will benefit the line of credit he saying the reports.
Apart from corporate borrowers, Bank of India also plans a credit line for retail customers who Are also in need of help as the lockdowns have effected their businesses and demand is lowered from the customers end. The bank plans to offer a top-up loan, which consists of three times the take-home salary of its home loan borrowers up to ₹5 lakh, to help during the amid of corona virus pandemic as stated by the reports. 16 March is the date for reference for sanctioning the loans and all borrowers excluding the ones that are been classified as special mention account 1 (SMA1), SMA2, and non-performing will be taken care of under this scheme, he said.
There will be a moratorium of six months on repayments of these loans for small businesses, and the corporate borrowers. 15% should be repaid n the six months following the moratorium, and the rest 85% will have to be paid in the next 6months that is one year after the loan is sanctioned as stated by the reports.