The center wants banks to focus on mudra lending and expects small borrowers to spur loan demand once the lockdowns relax & nbspPhoto Credit: & nbspBCCL
New Delhi: The center wants banks and financial institutions to focus on mudra lending, as the disbursement of small business loans to businesses and entrepreneurs under the Pradhan Mantri Mudra Yojana (PMMY) will lead to a steady recovery in loan demand once the partial increase Loosen lockdowns in the states.
Last month the government mentioned that over the past six years lenders had sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries. The average ticket size of the loans was approximately Rs 52,000. In FY 2021, lenders under the PMMY had approved loans worth Rs.279 billion. Of these, loans amounting to 2.64 billion rupees were distributed.
“We are also considering extending the interest subsidy by 2 percent to the immediate repayment of shishu loans sanctioned under the PMMY,” said a government official with direct knowledge of the matter ET. The program ends this month.
It is worth mentioning here that in the Shishu category, the beneficiaries are granted collateral-free loans of up to Rs 50,000. In June 2020, the Union Cabinet approved the pending on March 31, 2020 system of 2 percent interest rate cut for borrowers in the Shishu loan category under PMMY for a period of 12 months to eligible borrowers in order to seriously drive growth and a very independent India build up. The subsidy scheme is implemented by the Small Industries Development Bank of India (Sidbi).
In 2015, Prime Minister Narendra Modi launched the PMMY program to provide loans of up to Rs. 10ak to non-corporate, non-agricultural small / micro businesses.
The financial newspaper quoted the official as saying, “We have asked banks to prioritize this segment and ensure timely sanctions and withdrawals.” Banks were asked to periodically review the quality of small loan assets, including PMMY loans.
Earlier this month, the Reserve Bank of India had given small borrowers more time to repay their loans and given banks a special window of 50,000 rupees to lend to Covid-Health’s infrastructure to beat the blow To mitigate pandemic on the economy.
“The banks are already taking steps to improve the underwriting standards and to maintain regular and intensive contacts with PMMY borrowers,” the daily newspaper quoted the officials as saying.
Citing a senior bank official, the publication reported that banks will continue to lend under the scheme under commercial restrictions based on “the profitability of the project and an assessment of the borrower’s repayment capacity”.