When businesses are going through a tough situation due to the impact of COVID-19, state-owned banks have sanctioned about Rs 6.45 trillion worth loans to Micro Small and Medium Enterprises(MSME), retail and agricultural sector between March 1 and May 15. Loans that were sanctioned at the end of May stood at Rs.5.95 trillion.
Finance Minister, Nirmala Sitharaman said in a tweet that, during March 1 and May 15 around 54.96 lakh accounts from MSME, Retail, Agriculture, and Corporate sectors loans worth over Rs.6.45 trillion were sanctioned by PSBs.
Rs1.03 trillion was sanctioned by Public Sector Banks for emergency credit lines and working capital enhancements in the period March 20 to May 15, and it is considered as a substantial increase over the Rs65,879 crore that had been sanctioned up to May 8, finance minister, Nirmala Sitharaman said.
Soon after the lockdown was announced, State-owned banks launched an emergency credit line to provide funds to its existing MSME and corporate borrowers in the last week of March. And, as per the scheme, banks provide an additional line of credit of 10 percent of the existing funds and that is based on the working capital limits, subject to a maximum of Rs200 crore.
Apart from this, banks have also offered a 3-month moratorium on loan repayment till May 31 as per the RBI guidelines. According to experts, the Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three months, as the government extended the lockdown up to 31st May.
Indiforward’s Executive Director Abhishek Chauhan said that it has been high time that businesses were given at least a quarter of business operations before asking them to start addressing loan obligations. He further said that it is necessary to have an additional three-month moratorium by RBI in the interest of businesses and the financial sector.
SBIs research report,” Ecowrap” said that, they expect RBI to extend the moratorium by another three months.
RBI had allowed a moratorium of three-months on repayment of all term loans in March which were due between March 1, 2020, and May 31, 2020.
