Banks to create Covid loan book as per the RBI’s announcement
Public Sector Banks (PSBs) have decided to make available unsecured personal loans to individuals to meet the expenditure for Covid treatment. Further, they will also be extending loans to improve the healthcare infrastructure.
This is with a view to create a Covid loan book as per the Reserve Bank of India’s May 5 announcement that it will provide term liquidity facility of ₹50,000 crore to banks to ease access to Emergency Health Services.
Individuals (salaries, non-salaried as well as pensioners) will be offered unsecured personal loans for Covid treatment of self and family members.
The minimum and maximum amount of loan, which will be at a concessional rate and for a maximum period of five years, will be ₹25,000 and ₹5 lakh, respectively.
Dinesh Khara, Chairman, State Bank of India, said his Bank will charge 8.50 per cent interest on such loans.
Banks will be extending healthcare business loans to hospitals and nursing homes to set up oxygen plants along with power back up to ₹2 crore per entity at 7.50 per cent interest for a maximum period of five years.
The loans will be under the Government’s ECLGS (Emergency Credit Line Guarantee Scheme) 4.0.
Business loans for healthcare facilities
Banks will be giving business loans for healthcare facilities. The target group for such loans will be the ecosystem engaged in building/servicing healthcare infrastructure; hospitals, nursing homes, clinics, diagnostic centres and pathology labs.
The purpose of the business loans, which will be at a concessional rate and for a maximum period of 10 years, is to set up/expand healthcare infrastructure and to manufacture of healthcare products.
The quantum of loans to be offered will be up to ₹100 crore at metro centres; up to ₹20 crore in Tier-I and urban centres; and up to ₹10 crore in Tier-II to Tier-VI centres.
Rajkiran Rai G, Chairman, Indian Banks’ Association, underscored that the Covid loan book will get priority sector classification.
To encourage banks to provide fresh lending support to a wide range of entities under the emergency health services, RBI said they will be eligible to park their surplus liquidity up to the size of the Covid loan book with it under the reverse repo window at a rate which is 40 basis points higher than the reverse repo rate.