SBI moves to extend emergency credit line

The Covid-19 emergency credit line (CECL) will be in the form of a 12-month demand loan, which will be valid till 30 June

Shayan Ghosh, Deborshi Chaki
Updated20 Mar 2020
The credit line will be limited to 10% of the existing fund-based working capital limits
The credit line will be limited to 10% of the existing fund-based working capital limits

India’s largest lender State Bank of India (SBI) on Friday decided to extend an emergency credit line to eligible corporate borrowers and small businesses to meet their liquidity needs in the wake of the Covid-19 pandemic, according to a document seen by Mint.

The document, an internal SBI circular issued on Friday, said that the Covid-19 emergency credit line (CECL) will be in the form of a 12-month demand loan and that the scheme will be valid till 30 June. The bank will not charge any processing fee for this, and neither will there be any prepayment penalty. Borrowers will pay a fixed interest of 7.25%.

The credit line will be limited to 10% of the existing fund-based working capital limits, up to 200 crore, and existing customers who have availed special loan products are also eligible.

“With a view to provide some degree of relief to the borrowers whose operations are impacted by Covid-19, it is decided by the bank to make available additional credit facilities to the eligible existing borrowers by way of ad-hoc facilities i.e Covid-19 emergency credit line (CECL) to tide over the current crisis situation,” the circular said.

All standard accounts which had not been classified as special mention account 1 (SMA 1) or SMA 2 as of 16 March and till the date of sanction are eligible, the bank said. 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.

“The borrower can avail the sanctioned amount in one go. The facility will be considered as an exposure on the borrower and guidelines stipulated under the RBI Prudential Norms and market mechanism shall be adhered to,” the circular said.

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