Corona Virus (COVID-19) Update: SBI sets up Emergency Credit Line

The State Bank of India (SBI) has announced a COVID-19 Emergency Credit Line for borrowers. This would help borrowers beat the adverse impact of the COVID-19 outbreak.

According to SBI, businesses facing financial distress owing to the COVID-19 outbreak and the measures taken to curb its spread will be able to apply for loans through the Emergency Credit Line.

"The additional liquidity facility Covid-19 Emergency Credit Line (CECL), will provide funds up to Rs 200 crore and will be available till June 30, 2020," SBI said in a circular. Loans would be offered at an interest rate of 7.25 percent and will have a tenure of 12 months.

The SBI had decided to make additional liquidity credit facilities available via ad-hoc to borrowers whose businesses have been negatively affected by the COVID-19 outbreak and its preventative measures.

The CECL will be open to all standard accounts except those who have not been classified as Special Mention Accounts (SMA). The SMAs are those accounts which have been identified to have the potential of turning into a Non-Performing Asset (NPA). There are two types - SMA-1 and SMA-2.

SMA-1 are accounts where the overdue period is between 31 to 60 days. 

SMA-2 are those where the period is between 61 to 90 days.

According to FICCI, over 50 percent of companies in India will see an impact on their operations due to coronavirus outbreak, and over 80 percent of businesses have already witnessed a decline in cash flow.