SMEs urged to apply for credit support scheme before 31st

The Finance Ministry yesterday urged the struggling small and medium-sized enterprises (SMEs) to contact their respective banks before 31st of this month to gain access to the announced loan moratorium under the government’s credit support programme. 

The SMEs with an annual turnover between Rs.16 million and Rs.750 million and who had borrowed less than Rs.300 million are eligible for the loan moratorium.  

The Finance Ministry noted that the SMEs would get a moratorium on capital for a period of 12 months, for loans up to Rs.300 million in aggregate, by an SME, as per the instructions issued by the Central Bank to the licensed banks. 

The Central Bank last week issued a circular to all licensed banks, which contained the details of the eligibility criteria and how the banks should go about in making avail the facility across the performing and non-performing clients.  During the period from January 1, 2020 to December 31, 2020, the eligible borrowers are required to service only the interest on loans.

The SMEs can also seek an additional loan or a new facility, not exceeding Rs.300 million per bank, per borrower, provided that the borrower submits a credible business plan along with fulfilling certain other conditions. 

However, this facility is limited for the performing customers, provided the new facility’s tenure is five years and the rate is equal to the prime lending rate. 

Meanwhile, the non-performing customers can also write to their banks seeking a waiver of the total penal component of the interest accrued and unpaid on such loans. 

Further, a rescheduling scheme of such NPL facilities was also provided by the Central Bank based on the extent to which the repayment has been made from the total loan thus far. The banks will also grant a new working capital loan with a six-month tenure and below 10 percent interest rate for such NPL customers, to revive the business with a capital moratorium on such a loan during the first three months.