Nirmala announces loan festivals to spur demand

NEW DELHI: The government on Thursday directed state-run banks and non-banking finance companies (NBFC) to hold “loan melas” (loan festivals) across 400 districts during the coming festive season to boost consumption and accelerate economic growth.

Loans will be disbursed under a “shamiyana” (tent), and both banks and NBFCs will give loans to new customers, including homebuyers, farmers, micro, small and medium enterprises (MSMEs) and retail consumers, finance minister Nirmala Sitharaman said after a meeting with the top management of public sector banks in New Delhi.

The “loan melas” will be monitored by minister of state for finance Anurag Singh Thakur, who will ensure disbursal of loans in the presence of people’s representatives such as ministers or members of Parliament, she said.

Banks have been asked to give loans to new customers instead of recycling loans to old customers to make up the numbers, Sitharaman said. Her target to them is to extend loans to five new customers for every one existing customer.

The loan disbursal camps will be held in two rounds – the first round will cover 200 districts between October 3 and October 7, while the second round will kick off from October 11, a finance ministry spokesperson added.

Government officials with direct knowledge of the matter said on condition of anonymity that the dates have been selected to coincide with the festive season. Many people buy consumer durables, jewellery, cars, and houses during the festive season that typically lasts between September and December. It usually starts with Onam in September, peaks with Diwali in October (this year) or November.