The finance ministry on Tuesday said that Public Sector Banks (PSBs) have sanctioned loans worth Rs 6.45 lakh crore to 5.5 million borrowers belonging to micro, small and medium enterprises (MSMEs), retail, agriculture and corporate sectors during March 1 to May 15.
Out of that amount, Rs 50,000 crore was sanctioned in the week ending May 15, the ministry said.
On Tuesday, the finance minister’s office (FMO) tweeted, “Loans worth over Rs 6.45 lakh crore were sanctioned by PSBs during March 1 – May 15 for 54.96 lakh accounts from MSME, Retail, Agriculture & Corporate sectors; A notable increase compared to the Rs 5.95 lakh crore sanctioned as of May 8,” tweeted the finance minister’s office on Tuesday.
Experts said real measurement of the revival of industrial activities is actual disbursal of loans. The finance ministry could not immediately disclose the disbursal data. A finance ministry spokesperson did not comment on this matter.
“Industrial activity is directly proportional to the credit off take. Companies will not draw money from the sanctioned limit unless they are confident about their returns on investment. When they don’t draw from their sanctioned limits, it automatically indicates inadequate activity,” a representative of small industries who did not wish to be named said.
Easy credit and collateral-free loans to the farm sector and MSMEs are key to the Rs 20.97 lakh crore Atmanirbhar Bharat Abhiyan (Self-reliant India Initiative) to revive the coronavirus-hit economy.
“Public Sector Banks sanctioned over Rs 1.03 lakh crore as emergency credit lines & working capital enhancements in the period March 20 to May 15, which is a substantial increase over the Rs 65,879 crore that had been sanctioned up to May 8,” the finance minister’s office tweeted.
While announcing the first tranche of the five-part package, FM Nirmala Sitharaman unveiled a Rs 3 lakh crore emergency working capital facility for businesses, Rs 20,000 crore subordinate debt for stressed MSMEs and proposed to set up a ‘fund of funds’ with a corpus of Rs 10,000 crore to provide equity funding support for MSMEs.
Earlier on May 7, the ministry had said in a series of tweets that India’s economy was “poised to recover” as state-run banks had sanctioned loans worth Rs 5.66 lakh crore over the last two months to about 4.2 million account holders belonging to MSMEs, retail, agriculture and corporate sectors.
Commenting on it then, Niranjan Hiranandani, president, Associated Chambers of Commerce and Industry of India (Assocham), had said, “The industry does need money, particularly MSMEs. It is good that the money has been sanctioned, now disbursal should happen as soon as possible.”
Sanjay Aggarwal, senior vice president of the PHD Chamber of Commerce and Industry, said that it was of paramount importance that these sanctions get converted into disbursals as soon as possible.