State Bank of India, the country’s largest lender, has decided to extend term loan facilities to non-banking finance companies (NBFCs) as well as other companies to help tide over the liquidity mismatch these entities are facing due to the nationwide lockdown.
“We are working on a case-by-case basis on assessing the requirement of all companies including NBFCs. We will see what kind of support [term loan] we can give them. This will be on a case-to-case basis and on proper appraisal,” a highly-placed source in SBI told The Hindu .
“This is not a omnibus scheme,” the source said.
SBI has over 100 NBFCs as its customers and whoever applies for the loan, a decision will be taken on extending the term loan facility after reviewing the company’s financial position. The loans will be extended to firms having investment grade rating.
The official clarified there was no limit, upper or lower, as to the quantum of loan to be extended to these firms, and would depend on the requirement of the firm. “There is no set amount as to how much we will extend,” the official said, adding that this was an additional immediate liquidity support to the firms facing cash crunch.
NBFC borrowers of SBI have a good financial profile, except may be in one or two cases, as no such entity has faced a liquidity problem in the last one-and-a-half years, that is, since the IL&FS crisis.
“Most NBFCs [that had borrowed from SBI] have an investment grade rating,” the official said. Last month, SBI opened emergency credit lines for working capital loans for all its clients, which was 10% of the existing facilities, provided the asset classification was standard.
This facility was offered to all customers. However, NBFCs typically do not opt for working capital loans. Banks generally extend term loans to these entities.
The NBFC sector faced a double whammy when RBI announced a loan moratorium for three months.
While banks have not offered a moratorium to NBFC borrowers, these entities had to offer the moratorium to their customers who had taken a home or car loan, resulting in a liquidity mismatch for NBFCs. Crisil had said NBFCs rated by it would face ₹1.75 lakh crore of debt obligation maturing by the end of the April-June quarter.
