MUMBAI: As businesses come to a halt during the extended covid-19 lockdown, banks and the industry have sought government guarantee on loans.
Smaller businesses, with limited cashflows, have been the worst hit, unable to manage the disruption like their bigger peers.
Mint takes a look at how the scheme, if approved, will work. What is the scheme being proposed by banks? Lenders, through their lobby body Indian Banks’ Association (IBA), have suggested the government guarantee all incremental loans to small businesses.
According to estimates by bankers, the sector needs incremental loans of at least ₹50,000 crore and if that is guaranteed by the government, will allow risk-averse banks to start lending.