Credit and Finance for MSMEs: The 59-minute loan scheme was launched on November 2, 2018, to provide in-principle approval for a term loan or working capital loan from Rs 1 lakh to Rs 1 crore. However, in July last year, SBI Andhra Bank, Corporation Bank, Oriental Bank of Commerce, and Union Bank of India had enhanced the credit limit to Rs 5 crore.
Credit and Finance for MSMEs: Nearly two years after Prime Minister Narendra Modi launched the 59-minute loan approval scheme for MSMEs to ease credit access, 2,12,091 loan applications involving Rs 66,991 crore have been sanctioned as on August 31, 2020, according to the latest data shared by the government. The sanctioned applications have been up by 58.9 per cent from July last year. MoS Finance Anurag Thakur had informed the Rajya Sabha last year that 1,33,448 applications were sanctioned in July 2019. Out of the total sanctioned, 92.6 per cent or 1,96,473 loan applications involving Rs 54,545 crores have been disbursed till August 31, 2020, the data on the MSME dashboard portal shared by MSME Ministry showed.
The scheme, launched on November 2, 2018, provides in-principle approval for a term loan or working capital loan from Rs 1 lakh to Rs 1 crore. However, in July last year, State Bank of India, Andhra Bank, Corporation Bank, Oriental Bank of Commerce, and Union Bank of India had enhanced the credit limit to Rs 5 crore. According to the scheme, the interest rate starts from 8.5 per cent onwards while the platform is integrated with the government Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to check eligibility of borrowers.
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“This is an added bureaucracy in bank lending. Earlier banks used to deal directly with customers but now they ask to come via the 59-minute portal. So what value addition they are offering? For getting in-principle approval, MSMEs are required to pay Rs 1,000. Banks have been able to reach out to only 7 per cent of the MSME sector so far while the rest remain outside banking system with no credit from banks,” Anil Bhardwaj, Secretary-General, Federation of Indian Micro and Small & Medium Enterprises told Financial Express Online.
Businesses could also apply for the in-principle approval of Mudra loans ranging from Rs 10,000 to Rs 10 lakhs from the 59-minute loan scheme. The Mudra scheme is divided into three categories — Shishu for loans up to Rs 50,000, Kishore for credit between Rs 50,000 and Rs 5 lakh and Tarun for provided loans between Rs 5 lakh and Rs 10 lakh. The Finance Minister Nirmala Sitharaman in May this year had announced a 2 per cent interest subvention for loans under the Shishu scheme while the overall relief to MSMEs under the scheme would be worth Rs 1,500 crore and would benefit around 3 crore people.