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New 50-billion-rupee refinance facility from Central Bank
View(s):A 50 billion-rupee six-month refinancing facility was announced by the Central Bank (CB) on Friday, to support COVID-19- affected businesses including individuals and those self-employed.
The scheme will help tourism, direct and indirect export-related businesses including apparel, IT, tea, spices, plantation and related logistic suppliers, SMEs involved in manufacturing, services, agriculture (including processing), construction, value addition and trading businesses including authorised domestic pharmaceutical suppliers, self-employment businesses and individuals who have lost their jobs or income, and foreign currency earners (individuals and corporates).
The CB, in a public statement, said the re-financing facility is being initiated to implement the decisions taken by the Cabinet of Ministers on March 20 to introduce a wide range of fiscal and financial concessions for COVID-19 hit business activities including self-employment businesses and individuals.
Among these concessions are a debt moratorium (capital and interest) and a working capital loan at the interest rate of 4 percent for eligible customers.
The statement said that import facilities will not be permitted under this re-finance facility other than pharmaceutical drugs, medical equipment, food, fertilizer and essential raw materials and machinery and equipment.
“Financial institutions shall offer concessions under this scheme to all borrowers who have been affected by work disruption due to COVID – 19 and overseas lockdowns and requested relief through online facilities or other communication arrangements before 30.04.2020,” it said.
Under the scheme, a six-month debt moratorium will be provided on the leasing rentals of all three-wheelers, school vans, lorries, small goods transport vehicles and buses, and related assets such as motor bikes and taxies operated by the self-employed/owners; a debt moratorium until May 30 on personal loans granted to all private sector non-executive employees; a three-month debt moratorium for all personal loans and leasing rentals of value less than Rs. 1 million; and a six-month debt moratorium for affected industries in small and medium enterprises, tourism, apparel, plantation, IT and related logistic service providers.
It said pawning facilities falling due for settlement or maturing during the period up to 25.03.2020 shall be extended up to 30.09.2020.
Concessions were also offered for existing Non-Performing Loans (NPLs) where the penal interest charged up to March 25 shall be waived off by the concerned financial institutions.
In the case of the suspension of recovery actions, such recovery action will be suspended on condition that the concerned financial institution and the client reach a debt re-payment agreement.
Financial institutions shall defer passing new resolutions under the above Acts, for recovery of loans and advances in respect of borrowers participating in this scheme, the CB said.