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PM Modi’s 59-minute MSME loan approval: 2.23 lakh applications sanctioned by PSBs; 93% disbursed so far

Credit and Finance for MSMEs: MSMEs are required to share GST identification number, IT returns, six-month bank statements, and owner’s details to apply for a loan under the 59-minute scheme. However, eligibility for raising credit through the portal depends on the revenue, repayment capacity, and existing credit facilities.

Credit and Finance for MSMEs: Public sector banks (PSBs) have sanctioned 2,23,501 loans, under the 59-minute loan approval scheme launched by Prime Minister Narendra Modi in November 2018, to MSMEs as of February 1, 2021, according to the latest data released by the MSME Ministry. Out of over 2.23 lakh sanctioned loans involving Rs 72,502 crore, 93.6 per cent — 2,09,326 loans involving Rs 59,548 crore have been disbursed as of February 1, 2021. This is up from 2,03,120 loans amounting to Rs 56,773 crores disbursed as of November 30, 2020, and 1,96,473 loans amounting to Rs 54,545 crores disbursed as of August 31, 2020.

The scheme was launched to enable in-principle bank approval to a term loan or working capital loan for MSMEs from Rs 1 lakh to Rs 1 crore at an interest rate of 8.5 per cent onwards. However, State Bank of IndiaAndhra BankCorporation BankOriental Bank of Commerce, and Union Bank of India had increased the credit limit to Rs 5 crore in July 2019. The platform is integrated with the government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to check borrower’s eligibility. MSMEs are required to share GST identification number, IT returns, six-month bank statements, and owner’s details. However, eligibility of raising credit through the portal depended on the revenue, repayment capacity of the business, and existing credit facilities as MSMEs, which had raised loans earlier under other government schemes, can still apply for loans via the 59-minute loan approval scheme. The latest data was updated on the MSME Dashboard portal by the ministry.

The scheme is not restricted to new loans. Overall, only 7 per cent of the MSME sector has been reached by banks through different schemes while many don’t even go to banks. They take micro credit from friends and family and other non-banking channels. For instance, to set-up a tailor shop, the entrepreneur may not go to a bank,” Anil Bhardwaj, Secretary-General, Federation of Indian Micro and Small & Medium Enterprises told Financial Express Online.

While the scheme offered in-principle approval to a loan application in 59 minutes, the time taken for loan disbursement depended on the information and documentation provided by borrowers on the portal and banks. According to the scheme’s portal, the more accurate the data, the sooner borrowers will get disbursal while generally, post-in-principal approval, the loan is expected to be sanctioned/disbursed in 7-8 working days. “I assume that since applications are tracked, banks are cautious of the time taken for disbursement,” said Bhardwaj.

The amount disbursed to MSMEs via the 59-minute scheme as of November 2020 was only 5 per cent of the overall gross bank credit deployed to micro and small enterprises in November 2020. From Rs 10.57 lakh crore deployed in November 2019, the bank credit to MSEs was up 6.1 per cent to Rs 11.22 lakh crore in November 2020, according to the Reserve Bank of India’s January 2021 bulletin.