Credit and finance for MSMEs: SIDBI’s 59-minute loan approval program for micro, small and medium-sized enterprises (MSMEs), which ended its three years of operation in November, had sanctioned loans of 2.36 lakh involving Rs 79,149 crore. As of November 30, 2021. Loans, 2.20 lakh loans (93 percent) amounting to Rs 64.544 crore have been disbursed. Launched in November 2018 by Prime Minister Narendra Modi, the program would provide in-principle approval for term loan or working capital loan applications from Rs 1 crore to Rs 5 crore, although approval does not guarantee disbursement. credit.
Above all, 2 16,503 loans involving Rs 68,742 crores were already sanctioned as of November 30, 2020, indicating that only around 20,000 loans have been sanctioned in the past 12 months. New loans sanctioned from November last year to November this year represented a 9% growth in total sanctioned loans from 2.16 lakh to 2.36 lakh. This showed that 91% of the total loans sanctioned to date were from the first two years.
The CEO of PSB Loans Online, Jinand Shah, was not available for immediate comment. The platform operates the loan approval program in 59 minutes.
The disruption caused by Covid in the production processes of MSMEs could be one of the reasons, although during the second wave, manufacturing and overall economic activity was not completely stopped. Shah had told Financial Express Online in a previous interview that the program would like to double the 2.29 lakh sanctioned loans in April 2021 or reach 5 lakh sanctioned loans by the end of this year.
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“Our targets are quite high but we would like to achieve double the number of current sanctioned loans or at least 5 lakhs by the end of this year and 10-15 lakhs by the end of next year of sanctioned loans and 10-15 lakhs by the end of next year of sanctioned loans This goal is achievable if MSMEs know about the program and start applying, they can access credit as banks have to lend money anyway to MSMEs because it is a priority sector. If they receive qualified and digitally verified proposals, they will want to lend, “Shah said.
The program was originally started to offer credits of up to Rs 1 crore, but several banks including State Bank of India, Andhra Bank, Corporation Bank, Oriental Bank of Commerce and Union Bank of India, increased the credit limit to Rs 5 crore in July 2019 The interest rate charged was 8.5% and the platform is integrated with the Government Credit Guarantee Fund for Micro and Small Businesses (CGTMSE) to verify the eligibility of borrowers.
“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 we were able to get by. We would like the sanction 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. anonymity. sharing his experience of accessing credit under the program.