Credit and Finance for MSMEs: The 59-minute loan approval scheme by SIDBI for micro, small, and medium enterprises (MSMEs), which completed three years of operation in November, had sanctioned 2.36 lakh loans involving Rs 79,149 crore as of November 30, 2021. Out of the sanctioned loans, 2.20 lakh loans (93 per cent) amounting to Rs 64,544 crore were disbursed. Launched in November 2018 by Prime Minister Narendra Modi, the scheme is said to provide in-principle approval to applications for a term loan or working capital loan from Rs 1 crore to Rs 5 crore even as the approval doesn’t guarantee credit disbursement.
Importantly, 2,16,503 loans involving Rs 68,742 crores were already sanctioned as of November 30, 2020, indicating that only around 20,000 loans were sanctioned in the past 12 months. The new loans sanctioned from November last year till November this year represented a 9% growth in total sanctioned loans from 2.16 lakh to 2.36 lakh. This showed that 91 per cent of the total sanctioned loans so far came in the first two years.
Online PSB Loans CEO Jinand Shah wasn’t available for immediate comments. The platform operates the 59-minute loan approval scheme.
Covid-led disruption into MSMEs’ production processes might be one of the reasons even as during the second wave, manufacturing and overall economic activity weren’t completely halted. Shah had told Financial Express Online in an earlier interview that the scheme would want to double the 2.29 lakh loans sanctioned as of April 2021 or reach 5 lakh sanctioned loans by end of this year.
“Our targets are quite high but we would like to reach double the number of current sanctioned loans or at least 5 lakhs by end of this year and 10-15 lakhs by end of next year of sanctioned loans and 10-15 lakhs by end of next year of sanctioned loans. This target is reachable if MSMEs are aware of the scheme and start applying, they can access credit as banks anyway have to lend money to MSMEs as it is a priority sector. If they are getting qualified and digitally verified proposals, they would want to lend,” Shah had said.
The scheme was originally launched to offer credit up to Rs 1 crore but multiple banks including State Bank of India, Andhra Bank, Corporation Bank, Oriental Bank of Commerce, and Union Bank of India had increased the credit limit to Rs 5 crore in July 2019. The interest rate levied was 8.5 per cent onwards while the platform is integrated with the government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to check the eligibility of borrowers.
“It took over two weeks for us to get the loan sanctioned while the disbursement happened in the following week. The bank had initially rejected our application citing a lack of the right documents even though we submitted the same as per the requirements. Based on the suggestions from the bank, we tried applying again and could get through it. We would want the sanctioning process to be reduced to two-three days so that credit could be accessed faster in case there are any challenges,” a supplier of pharma products and head of a local association of pharma companies had told Financial Express Online on anonymity sharing his experience in accessing credit under the scheme.