Financial Daily from THE HINDU group of publications
Wednesday, Jan 30, 2002
Money & Banking
Public Sector Banks
SBI `relief package' for slowdown-hit units
Mr Janki Ballabh, Chairman, State Bank of India, with Mr R.S. Lodha, President, FICCI, at a seminar in Mumbai on Tuesday.
MUMBAI, Jan. 29
STATE Bank of India has taken the lead in providing a lifeline to weaker units hit by the current economic slowdown. The bank is offering a "relief package" to units in the worst affected sectors.
Mr Janki Ballabh, Chairman, SBI, today said the bank had identified industries affected by the slowdown. These included steel, tractors, textiles, chemical, tea, commercial vehicles, auto ancillaries, hotel and the engineering industry.
The relief package includes short-term loans at lower interest rates and a waiver of the penal interest rates.
Concessional rates of interest offered to the sick units can fall as low as 10.5 per cent. Currently, the bank's term lending rate is 12 per cent and the working capital rate is 11.5 per cent.
Mr Ballabh said, "the bank has formulated the scheme to prevent potentially viable companies hit by the recession from slipping into the red by giving them special facilities."
In fact, a similar scheme was evolved three years ago. The bank had reviewed it in December 2001 and added some new features and included additional list of sectors to be covered by the scheme.
Speaking at a seminar on `Emerging financial paradigm: Financing for growth in the current context', organised by FICCI here, Mr Ballabh pointed out that these measures were only for those industries affected by the slowdown.
The eligibility criteria as formulated by the bank for these industries are only those accounts that have been affected in the past one year on account of the slowdown; the track record of these units have to be good; and the relief provided by the bank will only be for a short period of one or two years.
"Units requiring funds for a longer period of time can be referred to the corporate debt mechanism," said Mr Ballabh.
Also, only those accounts that have been classified as standard assets as on March 31, 2001 or those accounts that have recently turned sub-standard will be considered for revival.
Among the accounts that will not receive the package are units which have not been impacted by the slowdown, those who have been wilful defaulters, or those units that are functioning with obsolete technology.
Send this article to Friends by E-Mail
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line