Public sector banks to offer up to Rs 5 lakh personal loan for Covid treatment

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Early in May, as the second Covid-19 wave was tearing through the country, Reserve Bank of India Governor Shaktikanta Das announced on-tap liquidity pool of Rs 50,000 crore for the relief of the victims of the infection.

Following the announcement, the public sector banks are coming up with offers of personal loans up to Rs 5 lakh to the people for meeting the expense of Covid-19 treatment.

Special loan

On May 30, the Chairman of State Bank of India (SBI) and Indian Banking Association (IBA) made a joint press statement on this issue saying all PSU banks will give a Covid treatment loan from Rs 25,000 to Rs 5 lakh.

SBI will charge 8.5% interest on these loans. All banks are free to choose their own interest rates, said the press statement. Besides this loan must be repaid within 5 years from the date of disbursal.

Public sector banks will provide “unsecured personal loans to individuals from Rs 25,000 to Rs 5 lakh for salaried, non-salaried and pensioners for meeting the emergency Covid treatment”, said a joint statement by SBI and IBA.

Self-employed professionals and those with their own business can also get these loans.

Oxygen plants

Banks can also offer business loans specifically for setting up oxygen plants. Under the revised Emergency Credit Line Guarantee Scheme or ECLGS norms. The finance ministry on Saturday announced that under ECLGS 4.0, loans of up to Rs 2 crore will be offered, capped at an interest rate of 7.5%.

This loan would be given to hospitals, and nursing homes for setting up specifically oxygen plants, backed by 100% guarantee cover by the government.

Loan for business

All public sector banks can also offer business loans for healthcare facilities up to Rs 100 crore to setup or expand healthcare infrastructure. Healthcare product manufacturers can also get these loans.

This loan will be for a tenure of maximum of 10 years. The quantum of loan will be Rs 100 crore for metro cities, Rs 20 crore for Tier-I and Rs 10 crore for Tier-II and Tier- III cities.

All these schemes being offered by public sector banks will form part of the Covid loan book and are under priority sector lending, the joint statement said.

Existing loan

Existing loan can be restructured during this second wave. Public sector banks have formulated a specific holistic approach for restructuring loans to individuals, small business and MSME specially.

Loans up to Rs 25 crore can be restructured. SBI and IBA said that on this count banks should be proactive and would reach out to the probable customers and offer cum acceptance would be done within a time period of about 30 days.

For loans to individuals, too, public sector banks have come out with a plan for implementation within a fixed time period, said the statement.