There is no doubt that the bank’s announcement to provide individuals with unsecured loans of up to 5,000 rupees to treat Covid is a humanitarian gesture. The best option is insurance: the expansion of insurance coverage will not exclude Covid as an existing condition, so that the person does not have to borrow to pay for Covid treatment. The government can partially subsidize premiums below a reasonable threshold to cover the population not covered by Ayushman Bharat. -If the combined ratio (claims plus settlement) exceeds 100%, hire an insurance company. Insurance reduces the often devastating medical expenses for the insured
The proposed plan to issue unsecured loans to individuals at low interest rates has encouraged fraud. Loan approval must be based on business calculations and bank credit evaluation, but public banks must follow government guidelines to provide cheap credit. For example, the generous personal loan sanctions and any defaults by “making up” bankers will exacerbate the banks’ non-performing loan problems. It is better to use public funds to allocate health insurance than to recapitalize the bank’s lost funds due to reckless Covid treatment loans.
There is already a standard personal Covid health policy covering home care and preclinical treatment as well as concurrent treatment costs for comorbidities. Actuarial calculations are required to reduce costs.