Public Sector Banks Disburse Rs 2.5 Lakh Crore Through Loan Melas in October

State-owned banks disbursed over Rs 2.5 lakh crore worth of loans in October in an effort to prop up demand in a slowing economy.

Loan melas were conducted in two phases, from Oct. 1-9 in 226 districts and from Oct 21-25 in 148 districts, the Ministry of Finance said in a statement on Thursday. In the first phase, public sector lenders disbursed loans worth Rs 81,695 crore, while another Rs 1.7 lakh crore in loans was disbursed in the second phase.

Finance Minister Nirmala Sitharaman in September had directed public sector banks to organise customer outreach programmes across 400 districts to lift demand for credit, which in turn could help lift GDP growth from a six-year low in the Apil-June quarter.

Despite the loan sanctions cited by the government, overall credit growth in the economy remains subdued, shows fortnightly data released by the government.

According to RBI data, the net addition to non-food credit between Sept. 27 and Nov.8 stood at Rs 56,240 crore. The data released by the Reserve Bank of India reflects net additions to credit and hence may not reflect increased sanctions in cases where a larger quantum of loans may have been repaid during that time. Year-on-year non-food credit growth also remains weak at 7.9 percent for the fortnight ended Nov.8. Credit growth has remained at close to 8 percent for the last few months.

The data provided by the government shows that out of total loans disbursed by state-owned banks in October, Rs 1.05 lakh crore was in the form of new term loans and Rs 46,800 crore was fresh working capital loans, according to the Finance Ministry’s statement. Corporate loans stood at Rs 1.2 lakh crore, and advances disbursed to micro, small and medium enterprises were Rs 37,210 crore.

“PSBs actively reached out to their customers in these camps and made concerted efforts towards activities such as sanctioning of loans as per prudential norms, opening of accounts along with Aadhaar and mobile seeding of accounts, and popularising BHIM app,” the statement said.

Credit To NBFCs

Banks extended credit worth Rs 19,627 crore to non-banking finance companies that are currently facing liquidity shortage.

Public sector banks bought pooled assets of NBFCs worth Rs 1,453 crore, the statement said. Under the partial credit guarantee scheme, they bought Rs 2,876 crore worth of pooled assets for which the central government would provide them a guarantee of first loss up to 10 percent. The government will provide guarantee to public sector banks for a total amount of Rs 1 lakh crore during the ongoing financial year.