May 24, 2022

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Banks to offer collateral-free loan for treatment; See details

State Bank of India (SBI) has announced a COVID-19 personal loan to its customers who need a credit line for COVID treatment for themselves or for their family members, without any collateral. While making the announcement, SBI Chairman Dinesh Khara said that the collateral-free loan of up to Rs Five Lakh will be made available under the Emergency Credit Line Guarantee Scheme (ECLGS). 

This development comes in tandem with the announcement of Public Sector Banks offering unsecured loans of up to Rs 5 Lakh for people affected by the devastating second wave of the COVID-19 pandemic.

The announcement was made by the SBI Chairman at a joint press conference by the Indian Banks Association (IBA) and SBI. Individuals including salaried, non-salaried and pensioners can avail of unsecured personal loans from Rs 25,000 to Rs 5 lakh to meet COVID-19 treatment while the repayment tenure is said to be a maximum of 5 years and SBI would charge an interest of 8.5{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} per annum. The other Public Sector Banks have not revealed their interest rates but are free to decide on their own.

The announcement at the press conference by the Indian Banks Association is part of three new lending programs announced on Sunday to provide new loans to vaccine manufacturers, hospitals, pathology labs, manufacturers and suppliers of oxygen, ventilators, importers of vaccines and COVID related drugs, logistics firms and people affected by COVID-19. 

MEME loan restructuring up to Rs 25 crore

The resurgence of the fresh COVID-19 wave has put many MSME, individuals and small businesses under stress. Taking cognisance of the prevailing situation. RBI on May 5 had announced Resolution Framework 2.0 under which individuals and small businesses having exposure up to Rs 25 crore can opt for loan restructuring if they had not availed of the earlier scheme.

This is the second restructuring scheme announced by the central bank in less than one year, with the first unveiled in August last year when the first COVID-19 wave had battered the Indian economy with a contraction of 8{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} during the financial year ended March 2021.

For the resolution framework 2.0 announced by the RBI, Dinesh Khara said all public sector banks have come out with a formulated templated approach for restructuring of loans to individuals, small businesses, MSMEs up to Rs 25 crore. The SBI chairman said during the previous restructuring scheme, SBI had about 8.5 lakh SME customers who were eligible for restructuring but only 60,000 borrowers availed it.