Banks are planning for contingency cash flow support and credit enhancement scheme to address the disruption challenge faced by mid-corporate companies. These companies are adversely impacted by commodity price and supply chain distress. Banks have set different criteria for categorizing the company as mid-corporate. However, the company with revenue of Rs 50 crore to Rs 500 crore falls under this category.
Although these talks are at an early stage, the banks are looking to preempt working capital disruptions for companies involved in export and commodity businesses and those exposed to the oil and gas segment to prevent defaults.
Suresh Khatankar, Deputy Managing Director of IDBI Bank said that they are working to offer credit enhancement support for companies affected by ongoing geopolitical tension between Russia and Ukraine. These mechanisms are part of their arsenal.
Commenting on the cash flow support, one of the lenders has said that they are still analyzing the impact on the mid-corporate segment, but cash flow support product is a go-to option for us as it decreases the default and can think of offering loans at lower risk.
