Speed up 59-minute loan sanction, government tells PSU banks


NEW DELHI: Amid criticism of its promised 59-minute loan scheme for micro, small and medium enterprises (MSMEs), the finance ministry is pushing state-run banks to bridge the gap between proposals that receive preliminary approval and final sanction.

Since its formal launch by PM Narendra Modi a little over two months ago, around 60% of the preliminary approvals done online have been converted into formal sanctions, with the total loan amount adding up to over Rs 24,000 crore, said sources.

This has raised questions over the effectiveness of the scheme, where loans up to Rs 1 crore are available to MSMEs that have a credit history, pay income tax and are part of the GST network.

The quick loan-sanction scheme was part of the government’s outreach to the MSME sector, which was complaining about liquidity shortage due to RBI’s policies and adverse impact of demonetisation and GST on a segment that is a significant contributor to GDP, jobs and exports. Officials said part of the reason for the conversion rate hovering around the 60% mark is the absence of documents.

Besides, the lenders have been told that there has to be a valid reason for rejecting a loan proposal and it cannot be whimsical. “This will also require a change in the mindset, which will not happen overnight,” the source said. Another official said the government had promised to process the loan application using technology in a time-bound fashion but did not guarantee a loan.

But, the government appears satisfied with the initial response, with some officials saying that some of the private lenders too wanted to join the 59-minute loan-sanction scheme, since it was meant for those with a prior credit and tax history.

Source : https://timesofindia.indiatimes.com/business/india-business/govt-tells-psbs-speed-up-59-min-loan-sanction/articleshow/67549444.cms

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