₹6.45 L-cr loaned to small borrowers
nNEW DELHI: Public sector banks have sanctioned loans worth ₹6.45 lakh crore in about two-and –a-half months to small borrowers, out of which about ₹50,000 crore was approved in just one week ending May 15, as the government attempted to alleviate the distress caused to businesses by the coronavirus disease pandemic and subsequent lockdown.
The loans were sanctioned to 5.5 million micro, small and medium enterprises (MSMES) and retail, agriculture and corporate sectors between March 1 and May 15, the finance minister’s office (FMO) tweeted on Tuesday, describing it a “notable increase compared to the ₹5.95 lakh crore sanctioned as of May 8.”
The loans included ₹1.03 lakh crore extended as emergency credit lines and working capital enhancements, an increase from ₹65,879 crore that had been sanctioned between March 1 and May 8, the ministry tweeted from its handle @nsitharamanoffc.
Experts cautioned that a more accurate measure of the revival of industrial activity would be the actual disbursal of loans. The finance ministry could not immediately disclose disbursal data. A finance ministry spokesperson declined comment on loans.
“Industrial activity is directly proportional to the credit off take. Companies will not draw money from the sanctioned limit unless they are confident about their returns on investment. When they don’t draw from their sanctioned limits, it automatically indicates inadequate activity,” said an executive member of a small industries association, who requested anonymity.
Easy credit and collateral-free loans to the farm sector and MSMES were components of the ₹20.97 lakh crore Atamnirbhar Bharat Abhiyan (Self-reliant India Initiative) announced by the Narendra Modi government to revive the economy in the wake of the economic crisis that followed the Covid-19 pandemic and lockdown.
While announcing the first tranche of the five-part package, finance minister Sitharaman on March 13 unveiled a ₹3 lakh crore emergency working capital facility for small businesses, ₹20,000 crore subordinate debt for stressed MSMES and proposed to set up a “fund of funds” with a corpus of ₹10,000 crore to provide equity support for MSMES.
On May 7, the FMO had said in a series of tweets that India’s economy was “poised to recover” as state-run banks had sanctioned loans worth ₹5.66 lakh crore over last two months to about 4.2 million account holders belonging to MSMES, retail, agriculture and corporate sectors, HT reported on May 8.
“The industry does need money, particularly MSMES. It is good that the money has been sanctioned, now disbursal should happen as soon as possible,” Niranjan Hiranandani, president of the Associated Chambers of Commerce and Industry of India (Assocham), had said then.
It is of paramount importance that these loan approvals get converted into disbursals as soon as possible, said Sanjay Aggarwal, senior vice president of the PHD Chamber of Commerce and Industry.