Credit and Finance for MSMEs: Central Bank of India has launched a new scheme to support businesses including MSMEs suffering from stressed liquidity and operational challenges.
Credit and Finance for MSMEs: Public sector lender Central Bank of India is offering its MSME customers an emergency credit facility under a new scheme to ease their liquidity position possibly under stress due to Covid-19 lockdown. “This is to help MSMEs tide over the current crisis in case they are facing challenges due non-realization of receivables, inventory pile-up etc. and to manage routine expenses and other operational issues. Under this scheme we are targeting more than 1 lakh MSME accounts to benefit,” a Central Bank of India spokesperson told Financial Express Online.
Through ‘Cent Covid-19 Sahayata’ scheme, MSME borrowal accounts can raise the credit up to 10 per cent of existing fund-based working capital limits subject to a maximum of Rs 50 crore. The repayment for the emergency credit has to be in 18 EMIs with six month moratorium period but there won’t be further extension given to repay, according to the spokesperson. The scheme is also applicable for agricultural enterprises and corporate and is valid is up to June 30, 2020.
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Recently, Small Industries Development Bank of India (SIDBI) had also extended the credit relief to MSMEs through a 90-day term loan offering to NBFCs, MFIs, scheduled commercial banks, and small finance banks for onward lending to MSMEs. The support would be provided from the Rs 15,000 ‘special liquidity facility’ that SIDBI had received from the RBI recently for liquidity support to MSMEs.
Meanwhile, gross bank credit growth to micro and small enterprises (MSE) had contracted marginally in February to 2.6 per cent from 3.1 per cent in January in the current financial year. From Rs 10.67 lakh crore credit deployed by banks as on March 29, 2019, the amount increased to Rs 11 lakh crore (3.1 per cent) as on January 31, 2020, and Rs 10.95 lakh crore (2.6 per cent) as on February 28, 2020, the latest RBI data showed. Since April FY20, the bank credit growth to MSEs had remained contracted till December.