The borrowing cost of health centers rated by Crisil is 10.5 to 11 per centCrisil Scores said on Friday the Rs 50,000 crore liquidity window provided by Reserve Bank of India (RBI) to banks under concern sector financing to enhance COVID-19 healthcare facilities will assist raise treatment capability, schedule of medications, and medical equipment.
Health centers can be amongst the most significant beneficiaries as incremental funding can possibly increase bed capacity in the nation by 15 to 20 per cent, it said.
Loans under the scheme for tenures up to three years are readily available to banks at repo rate till March 31, 2022.
Such loans will likewise be categorized under the top priority sector.Consequently, banks are anticipated to extend these loans listed below current rates of interest for business participated in health care activities.
These include makers and suppliers of vaccines and drugs; medical facilities; pathology laboratories; providers of oxygen; makers of emergency medical devices; logistics companies; and Covid-19 patients.As many as 354 Crisil-rated companies with aggregate bank direct exposure of Rs 40,000 crore will be qualified for such loans.
Pharmaceutical companies account for 68 per cent of ranked bank exposure, health centers (24 per cent of ranked exposure) are likely to obtain majority of the funding available.The loaning expense of medical facilities ranked by Crisil is 10.5 to 11 per cent and new loans taken for expansion under this RBI plan might be 300 to 350 basis points less expensive, leading to substantial interest savings.
Subodh Rai, Chief Scores Officer at Crisil Ratings, stated increased accessibility of funds at low cost will incentivise health centers to augment beds, oxygen storage, ICUs, and important medical equipment.
Even if half of the funding available is used to include hospital beds through brownfield expansion, it will mean five lakh incremental beds or 15 to 20 percent of India's current capacity.
In contrast, for entities in other healthcare associated sectors such as pharmaceuticals, the capital requirements for improving production capacity of important Covid-19 related drugs is not extremely high.Further pharmaceutical companies, owing to their strong credit profiles and schedule of export credit centers, have a fairly lower average expense of loaning (8 to 8.5 per cent).
Hence majority of pharmaceutical companies may not be keen to handle considerable debt under the RBI window to fund expansion.Also, just a few business are manufacturing COVID-19 vaccines and these have actually get federal government advances/ grants for moneying their requirement of Rs 5,000 crore.
While incentives under the liquidity window are appealing, hospital companies will thoroughly examine decisions considering sustainability of demand and availability of crucial resources like workforce and equipment.Anuj Sethi, Senior citizen Director at Crisil Scores, stated enhancing healthcare infrastructure has challenges beyond capital requirements.
Greater lead times for equipment and schedule of certified manpower are critical aspects that can develop traffic jams.
This is particularly true in the case of boosting production of important drugs such as Remdesivir where the expense to increase production capacity of 7 crore doses is only Rs 200 crore to 250 crore but lead times for purchasing and setup of machines exceed a year, Crisil said it is still early for health care players to evaluate their growth strategies.
There will be more clearness as soon as banks and loan provider reveal their policies for loans, and qualified companies decide on capital spends.