Govt to pvt lenders: Step up lending to small biz

NEW DELHI: The finance ministry is prodding private sector banks and non-banking financial companies (NBFCs) to step up loan approvals and disbursals to small businesses under a government-guaranteed scheme after it emerged that most lenders, barring HDFC Bank, have been slow off the block.

Of the Rs 48,000 crore sanctioned by private players, around Rs 20,000 crore is estimated to have been sanctioned by the country’s largest private lender, officials told TOI, prompting the government to nudge Axis Bank and ICICI Bank to take up the scheme more aggressively. HDFC Bank has so far disbursed around Rs 8,000 crore. Sources said there were detailed deliberations with the private players on Monday.

Latest data released by the finance ministry showed that banks had so far sanctioned top-up small business loans of around Rs 1.14 lakh crore, with the share of private banks estimated at around 42.5% – higher than the 36% share in credit that they had at the end of 2019. In the MSME segment, however, private players and NBFCs are seen to have a higher share of the pie.

While the share of sanctions is high, public sector banks have fared better on disbursements, where the share of private lenders was estimated at just under 37%. “Public sector banks were off the block early and they are moving as per our expectation. But most private lenders, including NBFCs, have been a little slow. We have requested them to speed up things,” said a finance ministry official.

Among the public sector lenders too, SBI is far ahead of competition, accounting for Rs 20,628 crore, or over 31%, of the sanctions by this segment, estimated at almost Rs 66,000 crore. In terms of disbursals, SBI has 37% share among the state-run players.

As part of the post-Covid-19 package, Emergency Credit Line Guarantee Scheme was launched under which the government covers the risk of default for additional 20% loans to businesses with annual turnover of up to Rs 100 crore and outstanding debt of up to Rs 25 crore. The government is hoping to sanction up to Rs 3 lakh crore through the special window.


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