Banks extending emergency loans to salaried, entrepreneurs after rate cut

The Reserve Bank of India drastically cut interest rates and also allowed banks to postpone lending to FDI, slowing down lending to various sectors, including workers and entrepreneurs. And with the loss/reduction of income and even risky jobs, many will seek such loans to survive in these difficult times. Adhil Shetty, CEO of Bankbazaar.com, says that given the job losses caused by the pandemic and the likelihood of recession, banks are concerned that interest rates on unsecured loans could skyrocket. Nevertheless, many of them have agreed to contribute to the aid through special emergency loans.

 

For the mercenaries: says Padmadia Chunduru, the director of the Indian bank: We have introduced products in several categories, not only for companies or MSMEs, but also for emergency pay, retirement loans and self-help groups. A loan for an individual salary from a bank is called an INDKOV emergency loan. Under this plan you can take out a loan of 20 times your last gross monthly salary up to 2 rupees. To get a loan, you have to have a salary account at a bank. If you are the borrower of a bank credit, you can use this credit even if you do not have a payroll account.

 

Add Chunduru: Even if you do not have an existing banking relationship, you can use an emergency loan if you have a deposit for it. The guarantor can be either your spouse or an employee of your organisation. No processing costs. The interest is accrued at 9.50% for 36 months, including the six-month holiday period. Even the Bank of India provides loans to private customers, but in the form of personal loans. Suitability : Three times the last salary paid to 5 rupees.

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Small entrepreneurs, businesses, self-employed, professionals : Large companies need credit because millions of households depend on it. However, in order to alleviate the difficulties of micro, small and medium-sized enterprises, most public banks offer the Covid 19 (CECL) emergency credit line.

 

C.M. Minocha, Head of Credit Policy and RSI, says Union Bank of India We are proposing a CECL programme for RSI and companies with a maximum amount of Rs. 50 crores. We have a separate program for small entrepreneurs, traders, self-employed, freelancers (MSE borrowers) who have a working capital limited to 5 rupees and a term credit.

 

The loan can be used to cover working capital, salary and other costs. Since even a photocopy is not available, we will give the borrowers enough time to complete the documentation, he added.

 

Baroda Bank’s emergency credit line is comparable to a short-term credit/loan on request for existing RSI of 8% and up to Rs 200 crore. The State Bank of India will provide up to Rs. 200 million for 12 months at a rate of 7.25%. Please note that most banks will provide an additional 10% of the existing working capital limits or a term loan.

 

For retirees: Existing customers of the Bank of India may have access to it. You can receive 15 times the monthly pension and a maximum of 2 lakh to cover unexpected expenses.

 

A zero commission of 8.75% is charged for processing this loan.

 

However, most banks only offer them to their existing customers. Like Shetty says: Lenders are reluctant to lend to new customers because it is difficult to obtain documentation and check new customers.

 

Of course, in the absence of these options, you may consider a short-term loan from your bank or a salary advance from a non-bank financial institution.

 

Sathyam Kumar, CEO, says LoanTap: The salary advance is a form of short-term loan for salaried specialists. You can receive up to 2.5 times the salary for 3 to 12 months. Another flexible credit limit is the overdraft facility, which allows customers to repeatedly withdraw and repay money.