Loans for healthcare infrastructure

The magnitude of extreme health emergency unleashed by the outbreak of the coronavirus pandemic, currently taking a heavy toll of human lives in its deadly second spell, has knocked down the country’s fragile healthcare system. Nobody can forget the ugly scenes at our hospitals, be it a government or a private hospital, where a huge load of Covid infected patients and their attendants faced lack of proper medical attention. The capacity of hospitals ran out for lack of space, shortages in critical-care beds, paucity of oxygen, delays in testing, shortage of health professionals in all categories and dearth of other human saving infrastructural facilities.

Let’s take the case of testing capacity of our hospitals and other private healthcare service providers. Testing has been listed as one of the crucial tools to slow down the pace of viruses from spreading. But the testing capacity of these institutions is facing extreme stress. Even as the diagnostic capacity was raised after the outbreak of the pandemic last year, the second deadly wave of the virus taking a huge toll on human lives has made this ramp-up meaningless and grossly inadequate to deal with the soaring demand. It’s pertinent to mention that the union health ministry puts the total number of labs available in India at 2,449, with roughly half of them run by private operators.

Here one thing must be clear. Lack of proper health infrastructure is not a Covid-induced story. The current situation is the result of decades of neglect of public health in the country and our healthcare system crumbled even when the pandemic was in its incipient stage. In fact, in pre-Covid times, healthcare facilities had been feeling the strain while managing huge patient-load. The Covid mayhem has forced the attention of authorities to bridge the infrastructural gaps existing in the healthcare system, be it at primary, secondary or tertiary level. It has simultaneously necessitated almost equal focus on all the three levels of primary, secondary and tertiary healthcare. Now, it is imperative for the government to look towards improving primary health care as a public good.

One of the main reasons for lack of infrastructural ramp-up in the healthcare sector has been lack of appropriate funding in the past. Notably, health experts had for long warned about the consequences of underfunding the health infrastructure. The Covid crisis has evidenced the fact that years of under-funding the healthcare sector has left it grossly ill-prepared for a crisis of the magnitude of Covid pandemic.

Meanwhile, it was a shot in the arm of efforts to raise healthcare infrastructure in the country, when the Reserve Bank of India (RBI) Governor Shaktikanta Das proactively announced huge funding support to the tune of Rs 50,000 crore for “healthcare needs” in the Covid-19 crisis. The scheme is, in fact, a comprehensive policy response from the RBI in the fight against the second wave, alleviating any constraint from the financing side for all stakeholders – government, hospitals and dispensaries, pharmacies, vaccine/medicine manufacturers/importers, medical oxygen manufacturers/suppliers, private operators engaged in the critical healthcare supply chain and above all the common man who may be facing sudden spike in health expenditure.

Remarkably, J&K Bank, the major banking player in J&K and Ladakh regions, has rolled out the loan facility in line with the RBI parameters. The Bank’s response by extending financial support through its customized loan scheme – JK Bank Health Plus Scheme – to raise healthcare infrastructure in J&K and Ladakh region would go a long way not only to strengthen the healthcare facilities, but would be a big support to unemployed healthcare professionals to establish their entities and earn livelihood.

What are the exact parameters of the RBI’s healthcare scheme? Have banks in J&K adopted the scheme?

As announced by the RBI, banks have been facilitated with funds to provide fresh loans to a wide range of entities including vaccine manufacturers; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and COVID related drugs and logistics firms. Even patients can be financed under the scheme for treatment.

Remarkably, J&K Bank has already announced to gear up its efforts for lending to entities and activities in line with the RBI’s healthcare scheme. Wide range of healthcare entities can avail loan for above mentioned activities under this scheme with all latest concessions announced by the RBI on May 5.

For example, funding as per the RBI scheme for establishing Pathology Labs and Diagnostic Centers will be done under the ‘JK Bank Health Plus’ Scheme if loan amount is within the range upto 100 lacs. In excess to this amount, it would be treated as Project Finance. Loans for manufacture of vaccine, oxygen and ventilators; and establishing hospitals and dispensaries will be done under project financing (Term Loan as well as Working Capital).

Finance to importers/suppliers of vaccine and priority medical devices, suppliers of oxygen and ventilators and COVID-related drugs would be extended under “Trade and Services” and such entities will be granted CC/SOD facilities.

The loans to COVID – related logistics firms can be extended for purchase of ambulances/specially designed cargo vehicles/staff buses. Cost of fabrication/installation of air conditioners/freezers/life support systems etc in such vehicles shall be considered as a part of project cost for deriving maximum permissible bank finance.

COVID patients can also seek financial assistance for treatment in terms of Covid related equipment like Oxygen Concentrators, Oxy Meters, any other equipment falling within the ambit of Covid treatment protocol. The scheme shall remain operational upto 31.03.2022.

Apart from Covid related infrastructure financing, what is the purpose of JK Bank Health Plus Scheme?

The scheme is especially tailored to finance qualified medical professionals for establishment/expansion/renovation/ modernization of healthcare centers/ clinics/polyclinics.

Dental Clinics, Medical diagnostic centers like pathology labs, ECG, X-Ray, Endoscopy etc., Physiotherapy & Slimming Centers, Skin Care & hair transplant centers, Dialysis centers, Polyclinics including Dieticians are covered under the scheme. An eligible entity can avail the loan facility up to Rs.100 lac against mortgage of property with realizable value of minimum 50% of loan amount or by opting CGTMSE cover (guarantee fee to be borne by the borrower) and submitting personal guarantee of promoters.

However in case of Post Graduate doctors or doctors with vast experience/reputation, the loan facility can be extended against third party guarantee of two or more persons with sound financial means/net worth to withstand the liability acceptable to the Bank.

Term loans are repayable in 3-7 years (including moratorium period of 6 months).

Is there any loan scheme for cooperative societies for creating healthcare infrastructure in rural areas?

Last year in October, the government launched a new scheme, Ayushman Sahakar, under which the National Cooperative Development Corporation (NCDC) extended term loans of Rs 10,000 crore to cooperatives for creating healthcare infrastructure in rural India.

Data reveals that there are about 52 hospitals across the country run by cooperatives with cumulative bed strength of more than 5,000. The NCDC fund is expected to give a boost to provision of healthcare services by cooperatives.

Any cooperative society with suitable provision in its bye-laws to undertake healthcare related activities would be able to access the NCDC fund. The NCDC assistance will flow either through the state governments or directly to the eligible cooperatives. Subsidy/ grant from other sources can be dovetailed.

Remarkably, the NCDC’s scheme aligns itself with the focus of the National Health Policy, 2017, covering the health systems in all their dimensions – investments in health, organization of healthcare services, access to technologies, affordable health care to farmers, among others.

It’s pertinent to mention that the Ayushman Sahakar specifically covers establishment, modernization, expansion, repairs, renovation of hospitals and healthcare and education infrastructure. It would also assist cooperative hospitals take up medical and Ayush education.

The scheme also provides working capital and margin money to meet operational requirements. The scheme provides interest subvention of 1 per cent to women majority cooperatives.