Clipped from: https://economictimes.indiatimes.com
The 100% guarantee scheme at a concessional rate of 9.25% for MSMEs under the Rs 3 lakh crore scheme was the second-biggest component of the Rs 20 lakh-crore package announced last week.
New Delhi: Finance minister Nirmala Sitharaman on Friday prodded public sector banks to expeditiously ensure easier flow of credit to micro, small and medium enterprises, and asked them to simplify processes.
At a review meeting through videoconferencing with top officials of all state-owned banks, Sitharaman also took stock of the banks’ readiness to operationalise announcements made under the Rs 20 lakh-crore Aatmanirbhar Bharat package that was unveiled last week to counter the economic impact of Covid-19 outbreak.
The union cabinet on Wednesday gave its nod to the key constituents of the package aimed at MSMEs, NBFCs and farm sector including the Rs 3 lakh-crore credit guarantee scheme for the MSMEs sector.
“FM discussed as to how we can take forward the MSME credit guarantee scheme,” Punjab National BankNSE 1.50 % managing director and CEO S S Mallikarjuna Rao told ETafter the meeting. Indian Bank managing director Padmaja Chunduru said the finance minister emphasised the need for quick disbursal of additional loans to MSMEs, and urged bankers to simplify process, formats and documentation.
The government is keen that key constituents of the package, particularly those for MSMEs, non-banking financial companies (NBFCs) and the farm sector, can be operationalised soon. The 100% guarantee scheme at a concessional rate of 9.25% for MSMEs under the Rs 3 lakh crore scheme was the second-biggest component of the Rs 20 lakh-crore package announced last week.
Currently, the rate of interest on loans given by banks to MSMEs varies from 9.5% to 17%, depending on the risk perception.
The financial services department tweeted, “Everyone aligned on the need for quickly addressing the needs of MSMEs & other customers. Operational details to be released soon.” Earlier in the day, the Reserve Bank of India had slashed its benchmark lending rate to historic low of 4%.
“All the banks are very-very optimistic about the schemes that have been announced in the recent past by the government to support the economy,” Central Bank of India managing director and CEO Pallav Mohapatra said after the videoconferencing with the finance minister.
“State-run banks’ sanction in the Covid-19 period is more than the corresponding period last year, which was a normal year,” he said. The finance minister had earlier in the day tweeted, “Loans worth over Rs 6.68 lakh crore were sanctioned by PSBs during March 1 to May 19 for 59.79 lakh accounts from MSME, retail, agriculture and corporate sectors. A steady increase in credit availability for each of these vital sectors.”
PSBs also sanctioned Rs 1.07 lakh-crore worth of emergency credit lines and working capital enhancements between March 20 and May 19, with Rs 25,527 crore of this amount being availed by customers.
The meeting also took stock of interest rate transmission to borrowers by banks and progress on moratorium on loan repayments.