State Bank of India (SBI) announced that it will start offering short term loans to its MSME customers. Under its new initiative called SME Assist, it will render working capital loans to MSMEs according to their input credit tax.
The scheme aims at providing working capital to the firms till they get their input tax refund, so that they could carry on with their business processes.
According to the bank, the loan processing fee is Rs.2000 and the loan applicants are required to provide a certificate from their chartered accountant confirming the input credit claims.
The moratorium period of first 3 months has been set up for the MSMEs and the firms can repay the loan either in one bullet payment or in six EMIs after the moratorium period is over.
The bank said that the loan will be approved outside Assessed Bank Finance (ABF) at 20 per cent of the existing fund-based working capital limit or 80 per cent of input tax claim due on purchases, whichever is lower.