SBI to offer loans to SMEs against input credit

State Bank of India (SBI) will now give short-term working capital demand loans (WCDL) called the SME Assist to small- and medium-scale enterprises (SMEs) equivalent to 80% of their input credit for a period of nine months, at a concessional rate of interest. The new facility will be available to 1.6 million SME customers that the bank services across the country.

“Main objective of this scheme is to provide working capital to SMEs while they wait to get the reimbursements of the input credit. Timely credit will help them smoothly transition to a new GST (goods and services tax platform. The input credit certificate is the only document that the SME has to show at the time of the loan. For three months, they need to service only the interest component and after that they can repay the loan as a bullet payment or repay it in remaining six months,” V Ramling, chief general manager-in-charge of SME at SBI, told DNA Money.

“This product will help them manage their working capital requirement till the time they get input credit. It also supports the government’s GST initiative, as it will help stabilise the SMEs to run their operations without any hurdle,” Ramling said.

SBI, which has loans outstanding of Rs 2.20 lakh crore to the SME sector said that the WCDL will be sanctioned outside assessed bank finance (ABF) at 20% of the existing fund based working capital limit or 80% of input tax claim due on purchases, whichever is lower. With a nominal processing fee of Rs 2,000, MSMEs can avail WCDL to meet their working capital requirement. Companies applying for a loan under the product have to provide a certificate from their chartered accountant confirming the input credit claims.

State Bank of India