Credit and Finance for MSMEs: The 59-minute loan approval scheme, launched by Prime Minister Narendra Modi in November 2018, had sanctioned 2,32,677 loans involving Rs 77,343 crore, as of August 2, 2021. This was up by only 0.54 per cent from 2,31,425 loans involving Rs 76,670 crore sanctioned as of April 30, 2021, Financial Express Online had reported. Out of the sanctioned loans, 93 per cent loans – 2,16,841 involving Rs 63,157 crore were disbursed, according to the available online data from the MSME Ministry. The scheme currently counts SBI, Bank of Baroda, ICICI Bank, Kotak Mahindra Bank, Punjab National Bank, IDFC First Bank, etc., among its partner banks.
Importantly, the growth in sanctioned loans had remained single-digit so far while the disbursement rate continued to be above 90 per cent. The current disbursement via the 59-minute loan scheme represented 6.14 per cent of the Rs 10.27 lakh crore gross bank credit to micro and small enterprises in May 2021, as per data from RBI’s May bulletin. However, the quarterly growth in sanctioned loan applications for last year as well was only around 5 per cent or less than that.
“Awareness about the scheme among MSMEs is the biggest challenge. This year we are targeting to create more awareness among this target audience. While the numbers of loans sanctioned and disbursed are growing but we have still touched the tip of the iceberg only as the market is huge…Here also, bank awareness is important to ensure sanctioning and disbursement are happening. The number we have touched is quite small as compared to the market in front of us. We have hardly touched 1 per cent of the 6.3 crore MSMEs in India through this scheme,” Jinand Shah, Chief Executive Officer, Online PSB Loans that operates SIDBI’s 59-minute loan scheme had told Financial Express Online in April this year.
The scheme enables term loans and working capital loans, and Mudra loans for MSMEs to purchase plant and machinery, technology upgrade, product expansion, purchase of raw materials, infrastructure development, etc. The in-principle approval for term loans and working capital loans ranges from Rs 1 lakh to Rs 5 crore, the credit limit under Mudra loans is up to Rs 10 lakh. Mudra loans offered up to Rs 50,000 are called Shishu loans, between above Rs 50,000 and up to Rs 5 lakh are Kishore loans, and above Rs 5 lakh and up to Rs 10 lakh are Tarun loans.