COVID Loan for MSMEs: SBI & Many State-Run Banks Announce Emergency Credit Line at Lowest Rates

Updated on: 23 Jan 2024 // 3 min read // #mmm news
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In wake of economic disruptions caused by Coronavirus outbreak, India’s largest lender the State Bank of India has announced an emergency credit line ‘COVID 19’ for MSMEs.

The ad-hoc SBI COVID 19 credit line will be available up till 30 June 2020 for the maximum of up to Rs 200 crore at flat 7.25 per cent interest rate. The purpose of the emergency credit line is to ease out the liquidity mismatch of corporates during the current lockdown situation in the nation.

All standard accounts, except for Special Mention Accounts 1&2, are eligible to apply for SBI COVID 19 loan. The facility will be made available basis the Fund Based Limits of the corporates. The sanctioned amount can be availed of lump sum.

The emergency credit line adheres to Reserve Bank of India’s Prudential Norms. The repayment structure is also uniform. The Covid 19 Loan will support a moratorium period of six months from the date of disbursement, followed by six EMIs.

After SBI’s announcement about COVID 19 Loan, several other state run banks followed the suit and announced emergency credit line for their corporate customers.

Here are details:

Emergency LoanMaxium amountTenorRate of Interest
SBI Covid 19200 crore12 months7.25%
Union Bank emergency line of credit(MSMEs)10 per cent of the existing working capital limit36 months8%
Indian bank COVID-19 emergency loan (MSMEs)100 crore36 months8.25%
Indian bank COVID-19 emergency loan (individuals & others)2 Lakh60 months8.25%
Bank of Baroda emergency credit line (MSMEs)10024 months8.15%

Union Bank of India extends 3 year emergency line of credit at 8% flat for corporate customers

The Union Bank of India has also set up an emergency credit line, subject to application till September 30, 2020, for its MSME and corporate customers affected by COVID-19. The UBI has offered a maximum 10 per cent of the existing working capital limit to standard accounts, as on February 1, 2020. The loan will be extended for 3 years or 36 months, including moratorium of up to 12 months. The rate of interest will be equal to current one-year MCLR with NIL margin at 8 per cent fixed rate of interest.

Uco Bank announces additional credit line for corporates

UCO Bank has also offered additional line of credit to its existing corporate customers to meet the cash flow issues amid the cronavirus crisis. The special loan facility can be availed at the existing lending rate.

Indian Bank announces 5 covid loans for individuals, pensioners & corporates

The Indian bank has announced 5 special COVID-19 emergency loan products for different customer segments such as pensioners, salaried individuals, self-help groups, MSMEs as well as large corporates.

The special line of credit for Corporates will extend additional funding up to 10% of the working capital limits subject to maximum of Rs.100 crores. According to bank’s official statement, large corporates and medium enterprises falling in the standard category are eligible to apply for this loan. The total tenor of the loan is 36 months, including moratorium of up to 6 months. The rate of interest is equal to 1 year MCLR on fixed basis. Similar line of products is also announced for self -help group borrowers.

The salaried can avail of loan up to 20 times of last drawn monthly gross salary, subject to a maximum of Rs 2 lakh. Emergency pension loans can be availed for maximum up to 15 times monthly pension, capped at Rs 2 lakh. These special loans have a tenure of 5-years at zero concessional interest or charges.

Bank of Baroda extends Covid Loan for MSMEs

Bank of Baroda has also extended an emergency covid loan for its existing MSME and corporate borrowers. The loan limit is fixed to maximum of 10 percent of the existing fund based working capital limits (FBWC). The loan can be availed for a maximum of Rs 200 crores. The additional credit limit is over and above the existing adhoc/excess/standby letter of credit (SLC)/ gold card limit.

The emergency credit line will be offered at one-year MCLR of 8.15 per cent without the standard premium for a maximum of 24 months. Further BOB makes it mandatory to pay 15 percent of the loan amount on monthly or quarterly instalment basis in first six months. The balance 85 percent amount can be repaid in next 12 months.

All standard accounts, except SMA 1 or SMA 2 as on 26 March, 2020, are eligible to apply.

Other banks that announced credit lines are Bank of India, Canara Bank, and Indian Overseas Bank.