Finance Minister Nirmala Sitharaman on Friday held a review meeting with heads of public sector banks (PSBs), asking them to implement the sectoral measures announced as part of the Atmanirbhar Bharat package to revive the economy affected by COVID-19. The meeting via video conferencing took place in the backdrop of the Centre announcing several measures that depend upon action by banks, such as Rs 3-lakh crore of fresh loans for MSMEs. At the meeting, everyone aligned on the need for quickly addressing the needs of MSMEs and other customers. Operational details of the measures will be released soon, according to the Department of Financial Services.
Since the Union Cabinet has already approved various schemes announced under the package, operational guidelines have been issued to banks. Under the Emergency Credit Line Guarantee Scheme (ECLGS) worth Rs 3-lakh crore for MSMEs, interest rates are capped at 9.25 per cent for banks and financial institutions, and at 14 per cent for NBFCs.
National Credit Guarantee Trustee Company (NCGTC) will provide 100 per cent guarantee against losses on loans advanced to eligible MSMEs and MUDRA borrowers under the scheme, which is open till October 31. All MSME borrower standard accounts with outstanding credit of up to Rs 25 crore as on February 29, and with an annual turnover of up to Rs 100 crore would be eligible for guaranteed emergency credit line funding. They can get up to 20 per cent fresh loans of their entire outstanding credit. In order to push credit into the economy, the government has also clarified to bankers that no action will be taken against them for commercial decisions gone wrong. “Loans worth over Rs 6.68 lakh crore were sanctioned by PSBs during March 1 – May 19 for 59.79 lakh accounts from MSME, Retail, Agriculture & Corporate sectors. A steady increase in credit availability for each of these vital sectors” the Finance Ministry said in a tweet earlier in the day.
It added, “Public Sector Banks sanctioned over Rs 1.07 lakh crore as emergency credit lines & working capital enhancements in the period March 20 to May 19, with Rs 25,527 crore of this amount already being availed by customers.”
As per a report, the Finance Minister has emphasised on the quick disbursal of additional loans to MSMEs, to simplify process, formats and documentation, Indian Bank Managing Director Padmaja Chunduru said after the meeting.