SBI extends Emergency Credit Line in the backdrop of COVID-19

State Bank of India (SBI) on Friday opened an emergency credit facility for borrowers affected by the Coronavirus (COVID-19) outbreak to meet the liquidity needs of corporate and MSME borrowers. With this, India's largest lender SBI became the first bank in India to launch such an emergency credit line which will be available till the end of June 30, 2020.

The bank in a three-page departmental circular addressed to all its chief general managers directed that a maximum loan amount of up to Rs 200 crore or 10 per cent of the existing fund-based working capital limits can be availed under this emergency line. The fund will also be available for existing SBI customers who have availed special loan product.

The document reads, "The Covid-19 emergency credit line (CECL) will be in form of a 12-month demand loan and the bank will not charge any processing fee for this and there will be no prepayment penalty." These loans will be given at a flat rate of 7.25 per cent.

All standard accounts which have not been classified under the category of special mention account 1 (SMA 1) & SMA 2 as on March 16 will be eligible. The borrowers will be able to avail the entire amount in one go, which can be repaid in six instalments after a moratorium period of six months from the date of disbursement of the loan.

Under RBI norms, borrowers must be categorized into special mention accounts based on their delay in repayment. Special mention account-0 (SMA- 0) loans are where the repayment overdue is between one to 30 days, SMA-1 between 31 to 60 days and SMA-2 from 61 to 90 days.