Credit and Finance for MSMEs: SIDBI’s 59 minutes in-principle loan approval scheme for micro, small and medium enterprises (MSMEs), launched by Prime Minister Narendra Modi in November 2018, has managed to record 10 per cent growth in loans sanctioned as of September 30, 2021, from August 31, 2020, analysis of the official data indicated. From 2,12,091 loan applications involving Rs 66,991 crore sanctioned till August-end last year, the volume grew to 2,34,905 loans involving Rs 78,409 crores as of September 30, 2021. Likewise, growth in loans disbursed was 11 per cent from 1,96,473 loan applications involving Rs 54,545 crores to 2,18,977 applications involving Rs 64,067 crores during the said period.
“The sanction varies month-on-month and it more depends on seasonality as well. From October till March, the growth in loans sanctioned is higher with the festive season running till January. MSMEs need more funding during this period as compared to other months. On the other hand, from March onwards, the growth is lower and lending is normally low as the period is more of audits in the banking industry. Once the loan is sanctioned, it is very unlikely that it is not disbursed to the borrower,” Jinand Shah, Chief Executive Officer, Online PSB Loans told Financial Express Online.
The portal will be looking to partner with white label platforms by this Diwali or December this year and non-banking financial companies (NBFCs) by January next year in order to boost credit access for more MSMEs applying through the portal, Shah had said in an interaction in September. The lending portal would also be planning for cash flow-based lending for MSMEs as a separate initiative in the current financial year.
“Cash flow-based lending is what we are expecting in this financial year. We are focusing on building the required infrastructure for it and that should be up in around three-four months from now. We are working closely with few banks including the largest ones that are already on the 59-minute portal. You need few segments of the ecosystem to be connected digitally and it should work end-to-end so that MSMEs don’t have to visit banks’ branches.” Shah had said.
Importantly, Rs 64,067 crore disbursed by banks under the 59-minute loan approval scheme as of September, 2021 was 4.8 per cent of total bank credit deployed to MSMEs. As of August 2021, Rs 13.25 lakh crore were deployed by banks to MSMEs, as per the Reserve Bank of India’s August data on sectoral bank credit. While Rs 11.10 lakh crore was deployed to micro and small enterprises, credit given to medium enterprises stood at Rs 2.15 lakh crore.