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Prime Minister Narendra Modi-led government's initiative to provide quick loans up to Rs 1 crore to small businesses from public sector banks appears to be bearing fruit. Loans worth Rs 30,000 crore have been successfully disbursed after it was launched in September 2018, The Economic Times reported.
The psbloansin59minutes portal will succeed further and see more credit outlay as banks transmit the 25 basis rate cut announced by the Reserve Bank of India in February, a government official told the newspaper.
As many as 24,000 new borrowers availed loans worth around Rs 6,400 crore and 68,000 repeat debtors borrowed Rs 23,439 crore, the official said.
"There is now less human interference in the sanctioning process. Also, since the loan documentation is done through the portal itself, it also creates a liability on the approving authority to provide reasons for delays and denials," a Finance Ministry official was quoted in the report as saying.
Businesses have to provide details about income tax returns, GST details and bank statements to avail of these funds. The method is easier than the conventional process to avail credit, but bankers are looking to simplify and automate it further, especially in case of firms that have complete documentation. Banks have not seen any issues with these loans yet. Through the current system, small and medium businesses get an in-principle nod from the portal and the credit is disseminated within a week, the report stated.
The Finance Ministry official added that the restructuring of MSME loans, which was announced by the RBI, will further help the industry. Even Financial Services Secretary Rajiv Kumar had said that this will help redistribute loans worth Rs 1 lakh crore to seven lakh eligible small businesses. "The scheme will free up additional resources, which will fuel demand and create further opportunities in the industry," he had stated.
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