SBI opens emergency credit line for borrowers

Hyderabad: Amid businesses getting affected due to the novel coronavirus pandemic, the country's largest lender State Bank of India has opened an emergency credit line to meet any liquidity mismatch for its borrowers.

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 a circular. The loan will be offered at an interest rate of 7.25 per cent with a tenure of 12 months.

With a view to provide some degree of relief to the borrowers whose operations are impacted by Covid-19, it is decided to make available additional liquidity credit facilities to the eligible borrowers by way of ad-hoc facilities - CECL to tide over the current crisis situation, the bank said in a circular to all branches.

The bank said the credit line is open for all standard accounts which have not been classified as SMA 1 or 2 as on March 16, 2020 are eligible to avail this credit line.

Special Mention Accounts (SMA) was introduced to identify those accounts that has the potential to become an NPA/stressed asset. SMA-1 accounts are those where the overdue period is between 31 to 60 days. while, in SMA -2 accounts overdue is between 61 to 90 days.

All standard accounts as on March 16, 2020 and till the date of sanction are eligible. However, standard accounts classified as SMA 1 and SMA2 are not eligible for availing credit facility. The maximum loan that that could be availed under special scheme is capped at Rs 200 crore. SBI said this loan facility shall be made available as Fund Based Limits only.

India's largest lender SBI said the loans will be repayable in six equated monthly installments after a moratorium period of six months from the date of loan disbursement.

The scheme is aimed at helping companies to meet the temporary liquidity mismatch arising out of COVID-19. The credit "facilities are to be made available at the specific request of the borrower, stating that the business has been adversely effected by COVID-19," the circular said.

According to a recent survey conducted by industry body, Ficci, over 50 per cent of companies in the country see impact of coronavirus on their operations. Nearly 80 per cent businesses have witnessed decline in cash flows due to the global pandemic, it showed.