PSBs to offer loans up to Rs 5 lakh for Covid-19 treatment

The PSB will be providing loan under the Emergency Credit Line Guarantee Scheme (ECLGS).

Hyderabad: In what could be some relief to those suffering from financial problems to pay for Covid-19 treatment, public sector banks will now offer unsecured personal loan for Covid treatment up to Rs 5 lakh to salaried, non-salaried and pensioners, said State Bank of India chairman Dinesh Khara. The rate of interest could be around 8.5 per cent but could differ across banks, he said on Sunday in a virtual press conference. The PSB will be providing this under the Emergency Credit Line Guarantee Scheme (ECLGS). The minimum loan under this will be Rs 25,000.

The meeting was also attended by IBA Chairman Rajkiran Rai and IBA Chief Executive Officer Sunil Mehta. The joint press conference was held to announce various Covid support measures by all public sector banks to mitigate the impact of Covid pandemic. “While the economy had revived well from the beginning of fourth quarter of FY21, Covid’s resurgence since April 21 has impacted the lives of individuals, and cash flows of businesses and MSMEs,” said Khara.

To address the disruptions caused by the resurgence of Covid pandemic, Reserve Bank of India (RBI) in the statement on May 5 has announced measures such as term liquidity facility of Rs 50,000 crore to ease access to emergency health services (Covid Loan Book), resolution framework 2.0 for Covid related stressed assets of individuals, small businesses and MSMEs and reassessment of working capital limits. “Government of India with a view to providing support to MSMEs, safeguard livelihoods and to help in seamless resumption of business activity and also to give fillip to finance the critical healthcare facilities, has announced modifications to the very successful ECLGS Scheme,” said a statement.

The validity of ECLGS has been extended to September 30 this year and disbursement under the scheme is permitted up to December 31. The banks have sanctioned Rs 2.54 lakh crore (disbursals pegged at Rs 2.4 lakh crore) and have room to disburse another Rs 45,000 crore under the plan. The interest rate on these has been capped at 7.5 per cent, said IBA CEO Sunil Mehta.

The PSBs have undertaken to implement the expanded ECLGS measures, to make loan products available to business entities to improve the healthcare infrastructure and to individuals to meet the expenditure for Covid treatment. They have also decided to put in place systems and processes for implementation of RBI’s Resolution Framework 2.0. Banks are expected to create a Covid loan book under the RBI Guidelines.

Accordingly, healthcare businesses can access loans for setting up oxygen plants under ECGLS. Loan up to Rs 2 crore are 7.5 per cent for hospitals, nursing homes for setting up oxygen plant, backed by 100 per cent guarantee cover. Loans up to Rs 100 crore will be expanded to setup or expand healthcare infrastructure and to manufacture healthcare products. Loans to the civil aviation sector were also made eligible under ECLGS 3.0, the Finance Ministry statement said. The banks will follow standard templates, portal and branch-based approaches. They will adopt a graded approach for restructuring.

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