The coronavirus pandemic is slated to have a significant impact on Indian businesses and has already caused an unprecedented collapse in economic activities over the last few weeks. A recently conducted industry survey said that businesses are grappling with tremendous uncertainty about their future. Jobs are also at risk over the coming months as a lot of firms indicate that they may look at some reduction in manpower in their respective companies.
As part of its relief measures, the government has notified all state-owned lenders to offer emergency credit lines to corporate borrowers. This is to tackle the fallout from the coronavirus (COVID-19) outbreak that has stranded businesses across the globe. Some public sector banks have stepped up to help tide over the Covid-19 crisis, with emergency funds to aid companies, both small and large, to continue their operations.
Emergency Financial Assistance from Banks
One of the first was India’s largest lender State Bank of India (SBI) has rolled out an emergency credit line. With the SBI credit line, borrowers can avail up to 10 per cent of their existing fund-based limits up to a maximum of Rs. 100 crores. These loans come with a tenure of 6 months and could be repaid at a concessional rate of 7.25 per cent.
Similarly, UCO Bank, Indian Bank, Bank of India, and Union Bank of India have also announced emergency credit lines for their existing MSME borrowers. Indian Bank has offered 5 special COVID-19 emergency loan schemes for its all types of customers from pensioners, to a salaried class, self-help groups, MSMEs as well as large corporates. Borrowers can avail of a salary loan of up to 20 times of his/her last drawn monthly gross salary, up to Rs. 2 lakhs. Emergency pension loans can also be availed by senior citizens, up to 15 times their monthly pension, capped at Rs. 2 lakhs. These special loans will come with a tenure of 5-years at zero concessional interest or charges.
The 5 emergency loans that were announced by public sector banks as part of Covid-19 relief are as follows:
IND- COVID Emergency Credit Line (IBCECL) for Corporates: Support funding will be provided of up to 10% of the working capital limits with a maximum of Rs 100 crore. This loan facility will be applicable for large corporates and medium enterprises for a period of 36 months with an initial moratorium of up to 6 months and additional fixed interest rate of 1-year MCLR, subsequently all other charges will be waived off.
IND- MSE COVID Emergency Loan (INDMSE-CEL) for MSME: An additional funding of 10% of FBWC limits with max Rs 50 lakhs will be made available for all MSMEs for 60 months tenor to ensure MSMEs are not derived off liquidity during these challenging times
SHG-COVID - SAHAYA LOAN for Self Help Groups: This will include 22 lakh women beneficiaries and to help them pass through the crisis. Each member will be eligible to avail a soft loan of Rs. 5,000 which adds up to Rs. 1 lakh per SHG. Loan duration would be for 36 months with a 6-month moratorium
IND-COVID Emergency Salary Loan for Retail borrowers: Salaried employees will be given loan up to an amount equivalent to 20 times of latest monthly gross salary – subject to a max of Rs. 2 lakhs. All charges and concessional interest will be waived off, loans are for urgent medical and other expenditures.
IND COVID- Emergency Pension Loan for Pensioners: 15 times of monthly pension with a maximum of Rs. 2 lakhs will be allowed with 60 months repayment with concessional interest and charges to be waived off.
Additional Reading: Bank Timings and Operational Changes amidst the Covid-19 Pandemic
Instant Credit for Salaried Individuals
Instant loan options are a great option for borrowers with no credit score or poor credit score, who are turned down by banks. Borrowers with low credit scores, as low as 600, are also offered loans by these instant credit platforms. These are a popular credit option, especially among youngsters and millennials. They are different from personal loans because of the amount of loan. As compared to personal loans, instant loans usually offer a smaller amount to borrowers. These are in the form of advanced salary loans, rental loans, etc. given to individuals in need.
As the name suggests, the money is instantly made available to the borrower. While some disburse the money within a day, some give it within half a day, and some within a few hours. Instant loans are generally for a short period for short-term expenses, offered by digital lenders including MoneyTap, EarlySalary, LoanTap, PaySense, Qbera, etc. The amount of the loan is offered up to a certain percentage of the borrower’s salary and comes with a tenure ranging from 1-12 months. With the varying types of loans, some platforms offer around a 3-month interest-only payment option to borrowers.
Personal Loan Schemes for Covid-19 Pandemic
To help people in dealing with the cash crunch during the coronavirus pandemic, banks such as Bank of Baroda, Punjab National Bank, Bank of Maharashtra and Bank of India have launched new personal loan schemes. These loans come with relaxed norms for customers. COVID-19 specific loans are primarily offered to existing customers requiring emergency funds to tackle cash flow disruptions, according to experts. Consumers facing liquidity related issues due to the lockdown can consider them.
Criteria for Availing These Loans
Lenders have laid out several conditions as to eligibility to choose these loans. Punjab National Bank, for example, is offering COVID-19 specific loans to existing customers who are drawing their salaries through the bank. Also, those who had a salaried account with United Bank of India and Oriental Bank of Commerce, which are now merged with PNB, are eligible for the loan. Bank of Maharashtra is offering this type of loan only to its existing housing loan customers. In the case of Bank of Baroda, customers should have earlier taken a home, car, personal, education and other loans to avail these loans.
In these challenging times of Covid-19 pandemic, many leading banks have committed to stand by their customers. Due to the hardships faced by various sectors of the economy, many banks have launched products and services to take care of immediate liquidity requirements of businesses and retail customers. These include emergency loans, personal loans, and credit facilities.