Modi govt’s guarantee-free loans for MSMEs: These PSU banks offer maximum credit to small businesses

While private and PSU banks, both have stepped up to disburse loans under ECLGS, the PSU banks have sanctioned more loans than private banks.

Under PM Narendra Modi’s Atma Nirbhar Bharat Abhiyaan, banks have already sanctioned more than Rs 1.36 lakh to small businesses that are under stress due to the coronavirus pandemic. Finance Minister Nirmala Sitharaman had announced the Emergency Credit Line Guarantee Scheme (ECLGS) for providing liquidity support to MSME, which allowed banks to sanction government-backed guarantee loans up to Rs 3 lakh crore by the end of October 2020. Out of the total amount, 44 per cent of the total target has already been sanctioned, said a report by Care Ratings. While private and PSU banks, both have stepped up to disburse loans under ECLGS, the PSU banks have sanctioned more loans than private banks.

24 per cent of the total loans have been sanctioned by the public sector banks, however, they further need to sanction nearly Rs 34,000 crore per month for the next three months to maintain their share in overall bank credit. State Bank of India (SBI) has recorded the maximum cumulative sanctions and disbursements of Rs 21,027 crore and Rs 15,112 crore respectively. After SBI, Punjab National Bank (PNB) has recorded the second-largest cumulative sanctions at Rs 9,464 crore.

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Both banks have sanctioned a large number of loans despite SBI and PNB having GNPAs of Rs 25,262 crore and Rs 13,798 crore in the MSME segment. Canara Bank, Bank of Baroda, Union Bank of India, and Bank of India have also sanctioned more than Rs 5,000 crore under the scheme so far.

Meanwhile, the revision in definition and eligibility criteria for MSMEs which raised the ceiling to avail the scheme from Rs 100 crore to Rs 250 crore has helped many small businesses in taking advantage of the government’s scheme. The government had also raised the cap on the maximum amount of loans that can be availed under the scheme from Rs 5 crore to Rs 10
crore.