Public Sector Banks Disburse Rs 81,781 Crore Through Loan Melas

State-owned banks have disbursed loans worth Rs 81,781 crore during Oct. 1-9 through loan melas, Finance Secretary Rajiv Kumar said.

Out of Rs 81,781 crore, new term loans worth Rs 34,342 crores have been disbursed, Kumar told reporters after holding a review meeting of public sector banks.

“There was sufficient demand which was seen at the ground level for housing, for personal loans, for small loans,” Kumar said.

According to data released by the Reserve Bank of India, net addition in credit during the fortnight till Sept. 27 was Rs 59,652 crore, taking the total credit to Rs 97.71 lakh crore. That compares with Rs 11,491 crore net addition of bank credit in a fortnight till Oct. 13, 2018.

However, this was the lowest year on year fortnightly growth of 8.8 percent since Oct 2017. According to the announcement made today, Rs 81,781 crore has been disbursed only by public sector banks in 9 days.

This comes after a slowdown in private consumption brought down India’s GDP growth to 5 percent in the first quarter of the ongoing financial year.

Loan melas were organised in 400 districts across the country to provide credit for agriculture, housing, vehicle, education and personal loans.

The second credit outreach program or loan mela would be organised from Oct. 21-25, Kumar said.

Corporates Owe Rs 40,000 Crore To MSMEs

Big corporates have reported to the Ministry of Corporate Affairs in their regular returns that they owe Rs 40,000 crores to micro, small and medium enterprises, Kumar said.

Banks have agreed to offer bill discounting against pending dues of such MSMEs, Kumar said, adding that lenders will reach out to all these MSMEs to offer bill discounting during these camps.

Bill Discounting is a fee that a bank takes from a seller to release funds that are due from their customer, and the lender recovers the amount due from the customer who owed a certain amount to the seller.

Assets Identified Under NBFC Credit Guarantee Scheme

Public sector banks have identified assets worth Rs 15,455 crore under the partial credit guarantee scheme, Kumar said.

Finance Minister Nirmala Sitharaman, in her maiden Budget speech, had announced a one-time six-month partial credit guarantee to state-owned banks for first loss of up to 10 percent on high-rated pooled assets of non-banking financial companies. The guarantee will be provided for a total amount of Rs 1 lakh crore during the ongoing financial year.

Banks have suggested that the government should tweak the guidelines of the scheme to allow pooled assets of NBFCs having ‘investment grade’ rating under the credit guarantee scheme.

According to the guidelines of the scheme, the pool of assets should have a minimum rating of ‘AA’ or equivalent.

“Banks have expressed that sometimes ratings agencies tend to be quite strict, so they wanted the rating requirement for assets to be brought down to investment grade, and Department of Financial Services will make a proposal for the same,” Economic Affairs Secretary Atanu Chakraborty said.

Bringing down the rating criteria would then make the scheme wider, and more NBFCs will be eligible to avail the partial credit guarantee scheme, said Raman Aggarwal, co-chairman of Finance Industry Development Council, a representative body of NBFCs.

“If the suggestion is accepted, this will help lower-rated NBFCs, having good quality assets, to participate in the scheme,” Aggarwal said.