The Government seems keen to cope up with the adverse effect of COVID-19 on the economy. It had previously announced that the Banks would allow an additional 10% of the existing fund based working capital to the borrowing units, subject to a maximum of Rs.200 Crore per unit. Results of said announcement seem to be coming forward, as with the lockdown coming into effect since March 25, the Public sector banks opened an additional line of credit to the existing borrowers, subject to a maximum of 10% of their existing fund based on working capital limits.
State owned banks have sanctioned loans worth about Rs.6.00 lakh crore in the last two months to various sectors, including MSME, agriculture and corporate, which have been hit hard by COVID-19-induced nationwide lockdown.
Out of the total amount of Rs.6.00 lakh crore, the Non-bank finance companies (NBFCs), which are major lenders to the unorganised sector have received Rs 1.18 lakh crore from these banks during the period between March 1 and May 8.
In one of her recent tweets Finance Minister Nirmala Sitharaman tweeted, “Said amount has been sanctioned to about 46.74 lakh borrowers consisting of MSME, Retail, Agriculture & Corporate sectors units, between March 1 and May 8, 2020 and a total financing worth Rs 1.18 lakh crore was provided to NBFCs”.
In her other tweet she said “Between March 20 – May 8, Public Sector Banks contacted 97 percent of borrowers eligible for emergency credit lines & working capital enhancements and sanctioned loans worth Rs 65,879 crore, up from the Rs 26,500 crore sanctioned as of May 4”.
The central government had announced a 21-day lockdown-1 from March 25 to put a check on the spread of coronavirus. Now, lockdown -3 has been extended upto May 17 with some relaxations.
Union Minister for MSME and Road transport Nitin Gadkari also on Monday said, ” He expects the Centre to unveil a financial package in two-three days, observing that the situation was very bad despite the three-month moratorium on loan repayments announced by the RBI”.
Also, Prime Minister Narendra Modi is going to address the nation today at 8.00pm whereas he has already urged the states to give a boost to the economy in a phased manner. He will give direction to future course of action to deal with the pandemic.
Sanjeev Kumar Khanna (Financial Mentor)
