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The State Bank of India (SBI) has recently announced a new personal loan plan — Kavach Personal Loan. The aim is to provide financial relief to thousands of people severely affected by the second wave of coronavirus pandemic. The collateral free loan will cover expenses of COVID-19 treatment of self and family members of the customer, the lender said.

“We are happy to introduce SBI Kavach Personal Loan scheme to help people affected in the wake of COVID -19 crisis. We believe this new scheme will offer much-needed financial assistance to the people to manage the COVID treatment-related expenses without any hassle," said Dinesh Khara, chairman, SBI.

SBI Kavach Personal Loan :-

The loans under Kavach Personal Loan will be collateral-free. The borrowers do not need to pledge any asset as security while applying for the loans under SBI Kavach Personal Loan plan. Under this scheme, customers will get an option to avail loans of up to Rs 5 lakh for period of 5 years. The minimum amount for loans has been fixed at Rs 25,000. The interest will be 8.5% per annum. Apart from the low interest rate and flexible tenure, the borrower will also get three months of loan moratorium. “This unique product is being offered under the collateral-free personal loan category and comes at the cheapest rate of interest under this segment," the bank said.

Customers can also apply for this loan to pay their previous medical expenses. “Reimbursement of expenses already incurred for COVID-19 related medical expenses shall also be provided under the scheme," SBI mentioned in a release.

Individuals including salaried, non-salaried and pensioners will eligible for SBI Kavach Personal Loan scheme. The borrowers can apply through SBI online banking portal for loans. “With this strategic loan scheme, our aim is to provide access to monetary assistance – especially in this difficult situation for all those who unfortunately got affected by COVID," Khara added.

“It’s our constant endeavor at SBI to work towards creating financial solutions for customers suiting their requirements,” he further mentioned.

This loan product will be a part of the COVID loan book created by banks following COVID relief measures by Reserve Bank of India (RBI). “In these trying times, SBI is committed towards taking care of customers’ financial emergency for covid treatment and other personal expenses in order to effectively overcome the COVID battle," SBI said.

Banks have finalised three sets of products to build a COVID book under the RBI liquidity scheme. The measures include a healthcare business loan for setting up oxygen plants, business loans for healthcare facilities and unsecured personal loans for COVID-19 treatment. The rates on loans for oxygen plants will be charged at 7.5 per cent.

“The resurgence of COVID-19 pandemic in India in recent weeks and the associated containment measures adopted at local/regional levels have created new uncertainties and impacted the nascent economic revival that was taking shape. In this environment the most vulnerable category of borrowers are individual borrowers, small businesses and MSMEs,” RBI Governor Shaktikanta Das had said.

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