Central bank invites Covid-19-hit firms to apply for refinance loan

 The central bank today invited applications from the business enterprises affected by Covid-19.

Issuing a notice today the central bank asked the firms hit by Covid-19 to apply –within a month – for the refinance service.

The central bank has offered the refinance scheme – through the monetary policy for the current fiscal year – to help the Covid-19 affected businesses. The central bank has, however, received very few applications in the first call, forcing it to again issues second notice with a deadline of one month.

Though, the monetary policy has earmarked around Rs 150 billion – under refinance programme to rescue the coronavirus-affected firms – the central bank has approved refinance applications for around Rs 64 billion by over 40,000 borrowers.

The central bank – after realising that the criterion for the programme has become strict distracting the Covid-19 hit firms to apply – has made easier criterion this time. However, refinancing loans will have a maximum maturity period of one year and will not be renewed.

Earlier the central bank has made it mandatory that a minimum of 70 per cent of the firms should be cottage and small industries, while applying for the refinance loan, but the provision has now been removed.

Under the refinancing loans, banks and financial institutions (BFIs) can issue personal loans and business loans of up to Rs 50 million at a low interest rate of up to five per cent. The central bank has, however, prioritised on firms that are listed under highly-affected and medium-affected groups. Though the central bank itself has been mobilising a refinancing fund, the guideline endorsed in July has provisioned that 70 per cent resources of the refinancing fund should be mobilised through BFIs.