The 59-minute loan scheme
The 59-minute loan scheme was launched by the government last year and was targeted on micro, small and medium enterprises (MSMEs). It was part of Prime Minister Narendra Modi’s 12-point action plan for the MSMEs announced in November last year.
The availability of hassle-free loans without any collateral has already been a hit with customers, which explains why some PSU banks are keen on raising the credit limit.
Turnaround time reduced from 20-25 days to 59 minutes
The scheme has reduced the turnaround time for sanctioning loans from 20-25 days to 59 minutes. The initiative is run by a consortium of five public sector banks (PSBs) — the State Bank of India (SBI), Bank of Baroda, Punjab National Bank (PNB), Vijaya Bank and Indian Bank — led by SIDBI.
The outstanding credit to MSME businesses grew to Rs 25.2 lakh crore at the end of 2018. Simultaneously, the consolidated non-performing assets (NPAs) in the sector increased to 9 percent from 7.3 percent.
Until December 25, 2018, the PSBs had sanctioned loan applications of 40,669 borrowers amounting to nearly Rs 14,100 crore through the portal. Out of the total 112,043 applications worth over Rs 37,400 crore received on the portal, which received in-principle approval, 38 percent were sanctioned, according to a reply furnished in the Lok Sabha by Minister of State for Finance Shiv Pratap Shukla on December 28 last year.