COVID-19 emergency credit: SBI disburses Rs 1,000 crore, Bank of Baroda Rs 606 crore

SBI offered loans at an interest rate of 7.25% for a tenure of 12 months.

By Ankur Mishra

State Bank of India (SBI) and Bank of Baroda (BoB), the top two state-run lenders, have so far disbursed around Rs 1,600 crore in the form of Covid-19 emergency credit, sources told FE.  “SBI has disbursed at least Rs 1,000 crore till now,” a source who did not wish to be named told FE.  BoB executive director Murali Ramaswami also said the bank has sanctioned Rs 606 crore to 4,598 borrowers under Covid-19 emergency credit line till April 19.

Majority of public-sector banks had last month announced emergency credit for borrowers amid the corona scare.
SBI was the first to announce an emergency credit line for its borrowers. In a circular, the bank said additional liquidity facility Covid-19 emergency credit line (CECL) will provide funds up to Rs 200 crore and will be available till June 2020.

SBI offered loans at an interest rate of 7.25% for a tenure of 12 months. The emergency credit from SBI is open to all standard accounts except those which have not been classified as special mention accounts (SMAs) as on March 16. SMAs are those accounts in which borrowers have not paid till 90 days. An account is classified as a non-performing asset (NPA) after 90 days of non-payment.

In a similar manner, BoB on March 25 had set up an emergency credit line to provide funds to its existing micro, small and medium enterprises (MSMEs) and corporate borrowers impacted by the outbreak of Covid-19. While the rate of interest for MSME borrowers was linked to the bank’s repo-linked lending rate of 8%, the loans to corporate borrowers were offered at a one-year MCLR without the standard premium. The bank’s one-year MCLR currently stands at 8%.

Experts say more borrowers are likely to line up for emergency credit from banks as many businesses will be hit by the slump in demand and zero footfall in the market in the wake of the pandemic.

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