Centre warns banks on delays in disbursing Rs 3 trn loans to MSMEs

Topics Centre | Banks | MSME

Workers of an ordnance clothing factory stitch personal protective equipment in Chennai on Wednesday Photo: PTI
The Centre on Thursday warned banks of consequences if they create any unwanted hurdles or delay in disbursal of loans amounting to Rs 3 trillion for the MSME segment.

In an interaction with the MCC Chamber of Commerce on a virtual platform, Anurag Thakur, minister of state for finance and corporate affairs said that it was brought to his ministry’s notice about a few bank officials at the branch level who were creating problems in loan disbursal for the MSMEs. Thereafter, strong corrective action was taken against those officials.

“This money is meant for entrepreneurs and should reach them. If the government has allocated this loan amount for the MSMEs, banks cannot delay its disbursal. If you (MSMEs) are facing any such delay, please write to us and corrective actions will be taken and the loan will be disbursed,” Thakur said while responding to a question from an attendee.

Thakur said that the Rs 3 trillion loan is targeted at bringing in more liquidity into the economy and help MSMEs stave off the current financial stress owing to the pandemic.

On Tuesday this week, State Bank of India chairman Rajnish Kumar had said that already 22,000 loans amounting to Rs 3,000 crore has been disbursed to the MSMEs under the Centre’s Emergency Credit Line Guarantee Scheme (ECLGS) which was rolled out to help the MSMEs.

The ECLGS, a credit guarantee by the government on loans to MSMEs, is expected to make way for a capital infusion of Rs 30,000 crore into the banking system.

Under this scheme, the guarantee is being provided by the National Credit Guarantee Trust Company (NCGTC) in the form of a Guaranteed Emergency Credit Line (GECL) facility. 

Thakur said the guarantee cover will be available to MSMEs for an additional working capital and term loan facility capped at 20 per cent of the outstanding credit limit as on February 29. The guarantee has been set at no more than Rs 25 crore per organisation.

“We had a meeting with the banking secretary and also had a virtual conference with the heads of all public sector banks on Friday. After the meetings, we have told the banks to start disbursing the loans and I think it should not be a problem to avail it,” Thakur said.
Sports and entertainment needs innovation 

Given the prevalent pandemic situation affecting normal lives and important sporting events like Olympics and Cricket World Cup being put on hold, Thakur, a sports enthusiast, said sports associations such as the BCCI need to innovate and think out of the box to sustain themselves in hard times.

“There are so many applications of virtual reality now. I think sports associations now should innovate”, he said.

According to Thakur, the IPL season this year could be conducted with a spectator cap of 1/5th of the stadium capacity and broadcasters have to think of ways to host the game on TV and other media and bag their revenue share.

“More and more people should watch games on the TV”, he said.

News agency ANI has reported that the BCCI is considering hosting this year’s IPL in a foreign country as the last resort.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel