59-minute MSME loan scheme yet to make a mark, says SBI Chairman Rajnish Kumar
Despite the tepid response from MSMEs, SBI is now planning to extend the scheme to auto buyers, especially car loans.
State Bank of India (SBI) chairman Rajnish Kumar on Monday said small business owners are not enthused with the 59-minute loans scheme launched by the government late last year.
Despite the tepid response, SBI is planning to extend the scheme to auto buyers, especially car loans, Kumar said.
He said a businessman having turnover of up to Rs 25 crore can get an in-principle approval for a loan of up to Rs 5 crore within 59-minutes under the scheme launched by Prime Minister Narendra Modi last November.
"The platform should have been very successful, but I think the awareness about it is yet to reach the targeted audience, that is MSMEs," Kumar told the annual banking conference Fibac.
He said up to 90 percent of MSMEs, which are called the backbone of the economy because of employing the maximum number of people, can get loans under the scheme.
"It can become a very powerful platform, the only thing is lack of awareness," he reiterated.
The chairman of the country's largest lender said, the algorithm analyses the inputs like GST payments, income tax payments, and the cash-flow statements while making a decision on the amount of loans a borrower is eligible for.
Kumar said the bank is also planning to extend the scheme to car and auto loans because all the loans in this category are in the same quantum.
In an apparent reference to the fear among bankers to sanction loans because of being held accountable in the future, Kumar said he has given instructions down the hierarchy that no one will be held accountable for decisions done by the algorithm.
He said the bank staff should do only the post-sanction monitoring, documentation and disbursal.
According to a recent media report, since the launch of the 59-minute loan scheme by public sector banks, 50,706 loan proposals were given in-principle approvals, of which 27,893 loans were sanctioned as on end of March 2019.
