Since the Cabinet has already given approval to various schemes announced under the package, operational guidelines have been issued to banks.
Finance Minister Nirmala Sitharaman
has emphasised on the quick disbursal of additional loans to MSMEs
New Delhi: Finance
Minister Nirmala Sitharaman on Friday held a review meeting with CEOs of public
sector banks and asked them to implement the mega "Atma Nirbhar
Bharat" relief package to revive the COVID-19-hit economy. The meeting via
video conferencing took place in the backdrop of the Rs 21 lakh crore stimulus
package announcement and the Reserve Bank of India (RBI) coming out with fresh
measures, including interest rate cuts.
The
Union Cabinet headed by Prime Minister Narendra Modi on Wednesday gave its nod
for many of the schemes announced as part of "Atma Nirbhar Bharat"
package to prop up the economy reeling under the COVID-19 crisis.
The
finance minister has emphasised on the quick disbursal of additional loans to
MSMEs, to simplify process, formats and documentation, Indian Bank managing
director Padmaja Chunduru said after the meeting.
Since
the Union Cabinet has already given approval to various schemes announced under
the package, operational guidelines have been issued to banks.
The
most important among them is the Emergency Credit Line Guarantee Scheme (ECLGS)
worth Rs 3-lakh crore for MSMEs hit hard by the coronavirus crisis.
The
100 per cent guarantee scheme at the concessional rate of 9.25 per cent was the
second-biggest component of the Rs 20 lakh crore comprehensive package
announced by Ms Sitharaman last week.
Currently,
the rate of interest on loans given by banks to the MSME sector varies from Rs
9.5 per cent to 17 per cent, depending on the risk perception.
The
MSME sector is considered as the backbone of country's economy as the sector
contributes over 28 per cent of the GDP and more than 40 per cent of exports,
while creating employment for about 11 crore people, second highest after
agriculture. The scheme is expected to benefit 45 lakh MSME units.
Other
scheme to help the stressed MSME sector also included Rs 20,000 crore
subordinate debt for stressed or loan defaulting MSMEs, which could benefit 2
lakh such businesses.
A
fund of funds for MSME is also being created, which will infuse Rs 50,000 crore
equity in MSMEs with growth potential.
After
the meeting, Central Bank of India managing director and CEO Pallav Mohapatra
said the finance minister took stock of the situation and reviewed the progress
of various schemes.
"All
the banks are very-very optimistic about the schemes that have been announced
in the recent past by the government to support the economy.
State-run
banks sanction in the COVID-19 period is more than the corresponding period
last year, which was a normal year," he said.
"Loans
worth over Rs 6.68 lakh crore were sanctioned by PSBs during March 1 - May 19
for 59.79 lakh accounts from MSME, Retail, Agriculture & Corporate sectors.
A steady increase in credit availability for each of these vital sectors"
the finance ministry had tweeted earlier in the day.
"Public
Sector Banks sanctioned over Rs 1.07 lakh crore as emergency credit lines &
working capital enhancements in the period March 20 to May 19, with Rs 25,527
crore of this amount already being availed by customers," it said.
Later,
in an interview with DD News, the finance minister said the meeting with the
public sector banks was "very good".
She
commended the work done by the public sector banks for the implementation of
the Rs 1.70 lakh crore PM Garib Kalyan Yojana, which was an announcement made
within two days after the lockdown was announced.
"I
must give credit to the public sector banks for having done a splendid job in
implementing PM Garib Kalyan Yojana. So now with that same spirit this (Rs 20
lakh crore) package we have come up with, a partial guarantee, full guarantee
for all enterprises... which banks will have to do. I was very reassured that
the banks spoke in a very positive way," she said.
On
the credit guarantee scheme, Mr Mohapatra said the government's commitment is
for the entire Rs 3 lakh crore. "The commitment on the government under
this Rs 3 lakh crore collateral free loans is 100 per cent."
During
deliberations, Indian Bank's Mr Chunduru said, "Banks decided to focus
also on Tier Ii and Tier III towns in all states to ensure needy MSMEs get the
succour. CEOs of PSBs welcomed the Rs 3 lakh crore fully guaranteed loan component
to MSMEs and assured the FM that all eligible units will get these loans
promptly."
Central
Bank's Mr Mohapatra said, "Risk aversion, to a great extent, has gone. No
actions are being taken for any commercial decision going wrong because of
other reasons."
The
meeting also took stock of interest rate transmission to borrowers by banks and
progress on moratorium on loan repayments.
The
RBI has increased the moratorium on loan repayment by another three months till
August 2020 to provide relief to borrowers whose income has been hit due to the
crisis.
Tags
Economy