Dubai: India expanded an emergency credit programme to airlines and hospitals to cushion them from the impact of a wave of coronavirus infections and deaths.
The loans, which were previously intended for specific sectors such as small borrowers, can be availed until September 30 or until total guarantees worth 3 trillion rupees ($41 billion) are offered, the Finance Ministry said in a statement Sunday. So far, about 2.5 trillion rupees have been disbursed, Sunil Mehta, Chief Executive of the Indian Banks' Association, said at a subsequent briefing.
Prime Minister Narendra Modi's administration is turning focus to protecting the economy as a devastating surge of Covid-19 infections ebb. While he eschewed a national lockdown in favor of localized mobility curbs, demand is still weak following a recession last year and a recent wave of infections that killed more than 150,000 people amid a severe shortage of basic medical facilities including hospital beds and oxygen.
"These are more proactive steps that are being taken to offer mitigation to the hardship that the sector might experience," Dinesh Khara, chairman of State Bank of India, said at a media briefing on Sunday. It's too early for any bank to say with "definitive certainty" on what impact the second wave of the pandemic will have on small and medium businesses, he said.
The overall size of the programme could be expanded pending cabinet approval, according to people with knowledge of the matter. Some aspects of a central bank borrowing window for Covid-affected individuals and medical sectors may also be included under the government guarantee program, they said, asking not to be identified citing rules. Calls to a spokesman of the ministry of finance were unanswered.
The enhanced programme will guarantee loans worth 20 million rupees to hospitals and clinics to set up on-site oxygen generation plants. Interest rates will be capped at 7.5 per cet
Small companies can borrow an additional 30% of their credit limit, up from 20% announced last year. Some eligible borrowers can extend the tenor of their loans by a year.