Loans to the tune of `81,781 crore were disbursed by the public-sector banks (PSBs) in just nine days through October 9 when the first phase of the outreach programme was organised in various districts, with advances to new customers having made up for as much as `34,342 crore, the finance ministry said on Monday, calling the programme a major success in improving the flow of credit to support economic growth.
After a meeting with chiefs of PSBs and top government officials, finance minister Nirmala Sitharaman said the drive saw disbursement to all critical segments of the economy ahead of the Durga Puja festival.
In order to ensure greater cash flow to small businesses, she said that banks have been asked to provide bill discounting facility to the MSME sector against payments due to them from large companies.
According to the returns filed by the companies with the ministry of corporate affairs, as much as `40,000 crore is due to MSMEs, the minister said, stressing that all efforts would be made to ensure these small entities get their dues ahead of Diwali. At the same time, corporate affairs secretary Injeti Srinivas is tasked with the job to nudge the large companies to clear their dues to the MSME sector at the earliest.
The second phase of the loan outreach programme would start from October 21 (before Diwali on October 27), finance secretary Rajiv Kumar said, asserting, however, that all prudential norms were being followed by the PSBs while extending the loans. Sitharaman said demand was visible and the effort through the loan outreach programme was to ensure that consumption should not be hit due to any perceived liquidity constraint.
The outreach programme comes at a time when non-food credit growth in the fortnight ending September 27 plunged to just 8.7% year-on-year to `97.11 lakh crore, the central bank data showed. The banking system had last recorded a single-digit growth of 9.9% in total non-food credit in the fortnight ending December 8, 2017.
According to an official statement, focus on home loans, vehicle loans, agriculture loans, education loans, and other MSME and personal loans has been raised. "It was reiterated that the outreach would be without any dilution in diligence or underwriting standards. It was also noted that with the recent recapitalisation of over `55,000 crore, PSBs are well equipped to support credit needs," the finance ministry said.
It also said PSBs had continued to support the NBFC sector. Since the IL&FS default in September 2018 until October 10, PSBs have sanctioned total support of `3,97,557 crore in the form of credit as well as pool-buyouts of `1,07,792 crore, including `15,455 crore under the newly-launched Partial Credit Guarantee Scheme. Disbursement by PSBs to NBFCs has been `39,068 crore between just September 19 and October 10.