VIA MSME Forum organised a webinar on “Managing Financial Crisis” – Opportunities, Challenges & Hurdles of Recent Financial Package on zoom.
The objective of organizing this webinar was to guide on Rs.3 Lakh Crs financial stimulus Package for MSMEs under the Emergency Credit Line Guarantee Scheme and the Role of Banks in Funding. Bankers explained issues pertaining to eligibility under the Scheme, a Cutoff date for financing, issues pertaining to additional collateral security, additional margin requirement, end-use of funds, the maximum entitlement of loan amount, issues in multiple banking and consortium, the interest rate to charge. Moratorium period, collateral securities.
Mr Vilas Parate, Zonal Manager of Bank of India, in his address mentioned that no processing fees is applicable for the said loan. He mentioned that the end use of the funds has to be for working capital and for business expenditure. No fund should be utilized for capital expenses. The loan amount of 20% will be calculated by clubbing the Balance of loan as on 29.02.2020 of all those lending Banks. He further clarified that the total outstanding loan should not exceed 25 Cr and the turnover of the borrower should not be more than 100 Crs.
A few Banks had earlier given 10% of the outstanding loans under to help the borrowers and this 20% would be over and above said 10%. The eligible amount of loan would be termed as working capital term loan (WCTL) and will have to be repaid over a period of 4 years with a moratorium period of 1 year. However, the borrower will have to pay only interest on the said loan regularly. He said that the rate of interest on the said loan would be 1% above EBLR subject to a maximum of 9.25%. He also confirmed that Banks are sending pre-approved sanction letters to the borrowers and the loan can be disbursed within 48 hours, once they complete the documentation.
Mr Sanjay Kumar, AGM (SME) of State Bank of India Nagpur that under this scheme MSME industries, as well as service sector, is covered. He also clarified that the very title of the scheme says that it is a Rs.3 lakh crores collateral-free automatic loans for Businesses including MSMEs. He further said that MSME and all types of businesses including contractors, builders, traders, service providers i.e. Hospital, etc. are entitled under this scheme. All those businesses that are not regular but classified as SMA 0 and SMA 1 are covered under this scheme. The borrowers who are SME 2, NPAs or stressed assets are not covered by this scheme. He said that all those borrowers who are eligible under the scheme should apply on or before 31st October 2020 to avail of the benefit under this scheme.
While calculating the eligibility of 20% loan, the balance term loans, as well as working capital loans (fund based) outstanding as on 29.02.2020, should be considered and Non-Fund based limits are not eligible for this loan. He also clarified that the borrower is not required to bring any additional margin nor any additional collateral security for the said loan.
Mr Pradeep Nath, Dy General Manager of Small Industries Development Bank of India (SIDBI), Chennai explained in details about the role of SIDBI under the said scheme. He explained that SIDBI would be also offering funds under the said scheme and also under the scheme announced by RBI Governor in which SIDBI has an access to Rs.15000 Cr which has to be utilized for refinancing to the Banks towards working capital margin.
More than 500 persons participated through zoom and Facebook. The said talk was followed by very Questions & Answers session and panellists have answered the queries asked by participants to their satisfaction.
Earlier, Mr Naresh Jakhotia, Treasurer – VIA in his opening remarks welcomed the speakers and also the participants and briefed about the scheme. Thereafter, President of VIA Mr Suresh Rathi, in his welcome address appeal to all the participants to take advantage of this scheme and also emphasized that never before such a liberal scheme was introduced by the Government for the benefit of the borrowers. Mr Girish Deodhar, Chairman of VIA MSME Forum in his address mentioned that this is the first program of MSME Forum. He also mentioned that in few developed countries they have given grants to the MSMEs which is to be utilized by them strictly for the purpose of payment, salaries, wages, power bills and other fixed overheads only. As against that the India Government came out with this Emergency Credit Line Guarantee Scheme under which Rs.3 Lakh Crs have been pumped into the system which can be availed by all borrowers to take care of their capital working requirement to tide over this unprecedented situation.
Mr O S Bagdia, Program Coordinator together with Girish Deodhar and Naresh Jakhotia helped the participants and bankers in getting satisfactory answers to their questions. Prominently present were Mr Agrawal, Head of SME Bank of India, Mr Hemant Kumar Verma, Relationship Manager – SBI, Dr Suhas Buddhe, Vice President – VIA.
Mr O S Bagdia, Program Coordinator gave his concluding remarks and proposed a formal vote of thanks.