Credit and financing for MSMEs: SIDBI’s 59-minute in-principle loan approval program for MSMEs, launched by Prime Minister Narendra Modi in November 2018, sanctioned 2,5511 loans involving Rs 78,738 crore as of November 1, 2021, data shows MSME ministry officials. Of the total loan amount sanctioned, 81 percent, or Rs 64,326 crore, has been disbursed to 2,19,526 borrowers to date. The share of disbursed loan requests remained at 93 percent of total approved requests. The growth of sanctioned loans from 2.12 lakh requests as of August 31, 2020, was 11% so far, while disbursed loans increased by 11.7% compared to 1.96 lakh requests in August of last year.
“From October to March, the growth of sanctioned loans is highest with the holiday season stretching until January. MSMEs need more funding during this period compared to other months. On the other hand, from March onwards, growth is lower and loans are normally low as the period is more devoted to audits in the banking sector, ”Jinand Shah, Managing Director of Online, told Financial Express Online. PSB Loans.
MSMEs can apply for business loans ranging from Rs 1 lakh to Rs 5 crore through the program portal. The in-principle approval of the application, according to the portal, is provided within 59 minutes, after which the lender selected by the borrower performs due diligence for the sanction and disbursement of the amount. Depending on the program, the loan should be sanctioned or disbursed within seven to eight working days. Currently, more than 21 banks, including SBI, Bank of Baroda, ICICI Bank, Kotak Mahindra Bank, Punjab National Bank, etc., are associated with the program.
“It took us over two weeks for the loan to be sanctioned while the disbursement took place the following week. The bank had initially rejected our request citing the lack of the correct documents, even though we submitted the same in accordance with the requirements. Based on the bank’s suggestions, we tried to apply again and were able to get by. We would like the sanctioning process to be reduced to two or three days so that credit can be accessed more quickly if something goes wrong, ”a pharmaceutical supplier and head of a local association of pharmaceutical companies told Financial Express Online.
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Online PSB Loans is also looking for white label related platforms by Diwali or December of this year and non-bank financial companies (NBFCs) by January 2022 for MSMEs and others to have access to a large pool of lenders. The portal also explores small business cash flow based lending as a separate program in the current fiscal year.
“Cash flow based loans are what we expect for this fiscal year. We are focused on building the infrastructure required for this and it should be completed in about three to four months. We are working in close collaboration with a few banks, including the largest, which are already on the 59 minutes portal. You need few segments of the ecosystem to be digitally connected and it should work end to end so MSMEs don’t have to go to bank branches. Shah had said in an interaction.
It is important to note that the disbursement of Rs 64,326 crore so far under the 59-minute loan approval program was 4.87% of Rs 109.56 lakh of the total gross bank credit deployed. by lenders in major sectors in September 2021. According to the latest RBI data on sector deployment, micro and small businesses have been deployed Rs 11 lakh crore while Rs 2.19 lakh crore have been deployed in medium enterprises .