Coronavirus: Bank of Baroda extends financial support worth Rs 2,300 Cr to MSMEs
The MSME sector is a key priority area and Bank of Baroda (BoB) is taking various steps, including extending a Rs 2,300 crore-worth financial support, to help the sector hit hard by the coronavirus-induced lockdown, the bank's Executive Director Vikramaditya Singh Khichi said.
The state-owned bank launched an emergency credit line to provide funds to its existing MSME and corporate borrowers in the last week of March, soon after the lockdown was announced.
In the past one month, the bank has approved 64,000 applications and about Rs 2,300 crore has been disbursed to micro, small and medium enterprises (MSMEs) to help them meet liquidity requirement, Vikramaditya told PTI.
Under the scheme, the bank provides an additional line of credit of 10 percent of the existing fund based on working capital limits, subject to a maximum of Rs 200 crore.
The MSME sector was already under stress the past few years due to an economic slowdown, and its financial position has fast deteriorated since the lockdown.
The bank is looking at reassessing working capital for the sector and, after the assessment, will enhance their capital so that they have enough liquidity to operate smoothly, Vikramaditya said.
They are also encouraging MSME units to take advantage of the one-time restructuring plan announced by the Revere Bank of India (RBI).
"The bank is promoting the one-time restructuring window extensively. Those who were hesitant to avail the restructuring window in the past are now looking at this option actively as an alternative," he said.
With a view to provide relief to the stressed MSME sector, the RBI had extended the one-time restructuring scheme by another one year, till March 2021. As per the central bank's directive, the restructuring under the scheme has to be implemented by December 31, 2020.
At the end of January this year, about six lakh MSME units had availed the one-time restructuring window of the RBI.
The MSME sector plays an important role in the growth of the Indian economy, contributing over 28 percent of the GDP and more than 40 percent of exports while creating employment for about 11 crore people.
As part of the handholding exercise, the bank conducted an outreach programme last week which saw MSME participation. The objective of outreach programme was to educate MSME borrowers about various facilities/options made available by the bank for their benefit.
Further, Vikramaditya said the MSME borrowers were made aware of the business opportunities that are likely to arise in certain segments, in the post-COVID-19 scenario.
The government is very keen to ensure that the MSME industry remains in good health, as it is one of the growth engines of the economy.