SBI first to offer Corona kavach personal loan up to Rs 5 lakh

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The much-discussed personal loan from banks for the treatment of Covid-19 has finally reached the consumer.

State Bank of India has become the first bank in the country to offer a personal loan for the treatment of Covid-19 following the creation of a Rs 50,000 crore liquidity pool by Reserve Bank of India in early May.

The country’s largest bank if offering these loans from June 11.

“We are happy to introduce SBI Kavach Personal Loan scheme to help people affected in the wake of Covid-19 crisis up to Rs 5 lakh. We believe this new scheme will offer much-needed financial assistance to the people to manage the Covid treatment-related expenses without any hassle,” said Dinesh Khara, chairman, SBI.

Unsecured loan

SBI will charge 8.5% interest on these loans that have t repaid in a maximum period of 5 years. All banks are free to choose their own interest rates but there is a limit set by RBI itself.

Public sector banks will provide these unsecured personal loans to individuals from Rs 25,000 to Rs 5 lakh for salaried, non-salaried and pensioners for meeting the expenditure of emergency Covid treatment.

Benefits

Current Covid treatment expenses as well as expenditure already incurred would be covered by this loan.

The purpose of this unsecured personal loan is to offer relief to the people for meeting medical expenses of self and family members.

This loan will be part of the Covid loan book being created by banks as per RBI’s Covid relief measures. All the commercial banks have to create this loan book according to the instructions of RBI.

There is a moratorium period of three months on repayment.

Other steps

Apart from these special purpose personal loans, banks are going to offer a special loan up to Rs 2 crore for setting up oxygen plants in the hospital or healthcare facilities.

These loans will be guaranteed by the government and the interest rate is capped at 7.5% annually.

All public sector banks can also offer business loans for healthcare facilities up to Rs 100 crore to setup or expand healthcare infrastructure.

This loan will be for a maximum tenure of 10 years. The quantum of loan will be Rs 100 crore for metro cities, Rs 20 crore for tier-I and Rs 10 crore for tier-II and tier- III cities.

Existing loans can also be restructured during this second wave of the pandemic. Public sector banks have formulated a holistic approach for restructuring loans to individuals, small business and MSME specially up to Rs 25 crore.