SBI announces COVID-19 related Credit Schemes

SBI announces COVID-19 related Credit Schemes for borrowers whose operations are impacted by the Coronavirus outbreak. A maximum loan amount of upto Rs 200 Crores or 10 percent of the existing fund-based working capital limits can be availed under this emergency line. The current article briefs the COVID-19 related Credit Schemes in detail.

COVID-19 related Credit Schemes

The three COVID-19 related Credit Schemes of the State Bank of India is as follows:

• Common COVID-19 Emergency Credit Line (CCECL) Scheme
• Liberalized Working Capital Assessment Scheme for MSME borrowers
• Easing of working Capital Financing- Reassessment of FBWC limits

Common COVID-19 Emergency Credit Line (CCECL) Scheme

To provide some relief to the borrows whose operations are impacted by COVID 19, it is decided by the bank to make available additional credit facilities to the eligible existing borrowers by way of ad-hoc facilities i.e. COVID-19 Emergency Credit Line (CCECL) Scheme to tide over the current crisis.

Purpose of CCECL Scheme

CCECL can be given to meet the temporary mismatch arising out of COVID-19 involving payment of statutory dues, salary, wages, electricity bill and rent, etc

Eligibility Criteria

The eligibility criteria to obtain the loan under the Common COVID-19 Emergency Credit Line (CCECL) Scheme are as follows:

• All existing Standard Accounts including SMA 0 and SMA 1 accounts as on date of sanction are eligible for the scheme
• All existing borrowers whose accounts are Standard (including SMA 0 and SMA 1 status) as on date of sanction irrespective of internal rating (SMA 2 status accounts are not eligible).
• Existing customers who have availed of other loan products like “SME Assist”, “SLC for MSME” and “SLC for GST Input Credit” etc. are also eligible for the facility.
• However, total additional exposure including the CCECL facility should not exceed 25% of the Fund Based Working Capital limits.
• MSME accounts that have been restructured in terms of RBI and not classified as SMA-2 will also be eligible under this dispensation.

Quantum of Loan

As part of the Common COVID-19 Emergency Credit Line (CCECL) Scheme, SBI offers 10% of the existing fund-based working capital limits with a maximum cap of Rs. 200.00 Crore. The Loan is provided in the form of Working Capital (Demand Loan)

The tenor of Credit under the CCECL Scheme

The tenor of the sub-debt facility granted under the CCECL Scheme will be based on the repayment schedule and it will be defined by the SBI.  The scheme offers a maximum tenor of 24 years

Repayment Details

The maximum repayment period is eighteen-month including a moratorium of 6 months for principal repayment, and the repayment will be in equal monthly installments. Interest to be serviced as and when applied.

Rate of Interest

The rate of interest provided under the CCECL Scheme is 1-year MCLR to be reset after 1 year. (Current 1-year MCLR is 7.40%)

Margin Details

The CCECL limit should be covered by the market value of the stocks and receivables as per the stock statement. The existing limits however need to be covered by the advance value of securities

Application Process Fee

The applicant no needs to pay a fee for processing the application under the Common COVID-19 Emergency Credit Line (CCECL) Scheme. For more details, access the State Bank of India (SBI)

Security Details

• SBI announced that security will be provided in the form of Extension of charge on existing primary and/ or collateral security

Liberalized Working Capital Assessment Scheme for MSME borrowers

Purpose of the Scheme

To provide additional finance on liberal terms for the build-up of current assets and to tide over the fallout of the COVID-19 Pandemic, SBI will provide enhanced working Capital (WC) limits for meeting the genuine business requirements of the unit.

Facility Type

SBI offers loan under the Liberalized Working Capital Assessment Scheme for MSME borrowers in the form of Working Capital (FB + NFB)

Rate of Interest

• The rate of the interest provided under this loan will be based on the card rate, linked to External Benchmark Rate

Scheme for borrowers with Max limits upto Rs. 5.00 Cr (Including Revised Limits)

Eligibility Criteria

The eligibility criteria to obtain the loan under the Liberalized Working Capital Assessment Scheme for MSME are as follows:

• Existing MSME Borrowers
• Account should be a Standard Asset as on date of sanction (SMA- 0, 1 & 2 are also eligible)
• Based on Projected annual turnover for FY 2021

Quantum of Loan

Borrowers will be eligible for WC limits Upto a maximum of 33 % of the revised projected annual turnover for FY-21. Max Rs. 5.00 Crore (FB + NFB), whichever is lower.

Salient features of the Scheme

• Reduction in margins and extension of the cover period of receivables is also permissible.
• Cover period on receivables (other than associates) may be increased to a maximum of 90 days (over and above the cover period) sanctioned during the last assessment).
• All other ad-hoc Limits sanctioned (if any) sanctioned earlier, will be subsumed in this limit.
• The limits proposed should be renewed/ reviewed within 12 months from the date of sanction of liberalized WC limits.
• Extension of Charge over the existing Primary and Collateral Security

Scheme for borrowers with Max limits above Rs. 5.00 Cr

Eligibility Criteria

• Existing MSME Borrower (Limits above Rs 5.00 cr.)
• Standard Accounts as on date of sanction (SMA 0, 1 & 2 are also eligible)
• Networking capital should not be negative as per the last renewal

Salient features of the Scheme

• Relaxation in the holding period/ cover period is permissible.
• Eligible for reduced margin and cover period of receivables
• All other ad-hoc Limits sanctioned (if any), will be subsumed in this limit

Guidelines on Computation of Drawing Power and reviewing the cash margin on LC/BG

Eligibility Criteria

• Existing borrowers having working capital facilities sanctioned in the form of CC/ OD Borrowers facing stress on account of Covid-19
• Accounts should be Standard asset (including SMA 0 & SMA 1)

Salient Features

In cases of borrowers where the Drawing Power is lower than the Sanctioned Limit, the margins on all forms of Stocks can be Salient features reduced and cover period for Receivables can be increased suitably to help the borrowers to avail additional DP

Easing of working Capital Financing- Reassessment of FBWC limits

Eligibility Criteria

• Existing borrowers having working capital facilities sanctioned in the form of CC/ OD
• Borrowers facing stress on account Covid-19
• Borrower’s accounts shall be standard including SMA 0 & SMA 1

Salient features

• Reassessment of limits to provide the borrower with need-based financial support.
• Assessment is done, keeping in mind the reduced margin requirement & revised holding period on Current Assets, the enhanced cover period for Receivables, and other genuine business requirements.
• Interchangeability: If the limits have been reassessed both ways interchangeability (from NFB to FB and vice - versa) may be permitted up to the extent of enhanced FBWC limits.

Documents Required

The documents required for SBI’s COVID-19 related Credit Schemes are as follows:

• Application/ Request letter for CCECL with justifications/certificate
• Request/Application of Liberalized Working Capital Assessment Scheme for MSME borrowers limits up to Rs 5.crores
• Turnover originally estimated for FY 2020-21
• Revised estimated turnover for FY 2020-21
• Application of Liberalized Working Capital Assessment Scheme for MSME borrowers limits above Rs 5 crores
• Projected Balance Sheet for FY 2021

Application Procedure

Promoters of MSMEs meeting the eligibility criteria as mentioned above can approach the Home branch of SBI to avail benefit under the Credit Schemes. The bank will disburse loans to promoters within 2 working days after complying with all sanction terms. The format of the application form for Re-assessment of the Working Capital Limit upto Rs 5.00 is attached here for reference. The format of the application form for Re-assessment of the Working Capital Limits above Rs 5 is attached here for reference.

Other Condition

For genuine business requirements, reassessment of existing working capital limits may be done with reduced margin & revised holding period for stocks and enhanced cover period for receivables. However, the existing ad-hoc limits will be subsumed into the revised working capital assessed