The finance ministry is pushing state-run banks to bridge the gap between proposals that receive preliminary approval and final sanction, amid the criticism of its promised 59-minute loan scheme for micro, small and medium enterprises (MSMEs).
According to statistics released by the ministry, around 60 per cent of the preliminary approvals on the scheme done online have been converted into formal sanctions, with the total loan amount adding up to over ₹24,000 crores.
Questions have been raised over the effectiveness of the 59-minute loan scheme, where loans up to ₹1 crore are available to MSMEs that have a credit history, pay income tax and are part of the GST network.
The quick loan-sanction scheme was part of the government’s outreach to the MSME sector, which was complaining about liquidity shortage due to RBI’s policies and adverse impact of demonetisation and GST on a segment that is a significant contributor to GDP, jobs and exports. Officials said in a statement that part of the reason for the conversion rate hovering around the 60 per cent mark is the absence of documents. Therefore, banks have also been advised to be proactive and reach out to those who do not come back.
Officials were reported saying in news interviews that the government appears satisfied with the initial response, and some private lenders too wanted to join the 59-minute loan-sanction scheme.