Banks offer emergency wages, business loans
Chennai/Mumbai: State banks have taken the initiative with loan offers aimed at minimizing the current impact of the slowdown on individuals and small businesses. SBI was the first to launch a Covid emergency line of credit, which allowed borrowers to take advantage of up to 10% of their existing fund-based limits (subject to a maximum of Rs 100 million). These loans have a six-month moratorium and could be paid in the next six months at a concessional rate of 7.25%.
Chennai-based Indian Bank announced five special Covid emergency loan schemes for its salaried class clients, pensioners, self-help groups, MSMEs and large corporations on Wednesday. Bank customers can take advantage of a salary loan of up to 20 times their last monthly gross salary, with an upper limit of Rs 2 lakh. For older people, you can borrow an emergency pension loan that is 15 times your monthly pension, with an upper limit of Rs 2 lakh. This comes with a 5 year loan term and zero interest or concessional charges.
Indian Bank MD and CEO Padmaja Chunduru said: “We have made these loans repayable over a longer period to give them flexibility in operations until the business gets back on track. With the salaried class and pensioners, it is more of a line to meet their immediate (medical) requirements and other expenses.
Union Bank of India MD and CEO Rajkiran Rai said his bank was also allowing borrowers whose cash flows to be affected by the Covid-19 blockade to take advantage of up to 10% of their existing working capital cap at reduced interest rates.
Bank of Baroda has introduced a Baroda Covid emergency line of credit, which provides additional financing of up to 10% of the sanctioned limits. The interest rate for corporate borrowers would be a marginal cost of 1 year loan rate of 8.15% without the standard premium. For MSMEs, the interest rate would be at Repo de Baroda's linked loan rate of 8%.
The Bank of India launched a Covid Emergency Support Scheme for businesses. By virtue of this, companies can take advantage of up to 20% of additional credit in their current working capital limit. People can get a personal loan, which is up to three times their last salary withdrawn. Those with mortgage loans can obtain an additional amount as emergency loans.