100-day campaign to boost small, medium firms

In a day’s time, the government will be launching ‘MSME 100 Days Campaign’. The scheme will be supported by a portal that will give an in-principle approval to eligible micro, small and medium enterprises (MSMEs) loan applicants without collateral. While it sounds like a good move to promote MSMEs, banks that are currently reeling under higher bad loans may exert more caution.

On November 2, around 200 MSME borrowers will gather at Vigyan Bhawan, Delhi to apply for loans via psbloansin59minutes portal. Devidas Tuljapurkar, Joint Secretary, All India Bank Employees Association (AIBEA), said, “(Public) banks are arranging 200 MSME borrowers at Vigyan Bhawan, Delhi. On the day, the banks would be sanctioning the first 300 proposals in 59 minutes.” Tuljapurkar fears that borrowing without collateral will increase risk and chances of higher bad loans.

The portal will enable inprinciple approval for MSME loans up to Rs 1 crore within 59 minutes. While a finance ministry statement says that “loans are undertaken without human intervention till sanction and/or disbursement stage”, it is understood that MSME will have to go to the banker to get the final approval.

“The banker (bank manager) has right to accept or reject the loan as they are just in-principal approval,” stated a source who is aware of the process. Tuljapurkar said, “Only time will tell, if such interventions by the bankers will be possible.”