The bosses of SBI, Union Bank and Central Bank have been driving down to their offices everyday to take stock of the biggest loan drive ever undertaken for MSMEs, discovers Tamal Bandyopadhyay.
The back office of the State Bank of India, the largest lender by assets, has shot off letters to its 810,000 small and medium enterprise customers, offering them pre-approved collateral-free loans to restart their businesses.
While 7,000 SBI branches are engaged in the sanction and disbursements of such loans, bank Chairman Rajnish Kumar is monitoring the progress in real time.
The scene is no different in other public sector banks.
The bosses of SBI’s neighbours in Mumbai’s business district Nariman Point — Union Bank of India and Central Bank of India — have been driving down to their offices everyday to take stock of the biggest loan drive ever undertaken for micro, small and medium enterprises.
These units are the second-largest employer with a 31 per cent share in India’s GDP.
Most of them are affected by the lockdown to contain the COVID-19 pandemic.
The banking system is expected to give Rs 3 trillion collateral-free ‘revival’ loans to those units that have bank loans on their books already.
The four-year loans, including one-year moratorium, are fully backed by government guarantee.
If a customer defaults, the government will compensate banks for the loan loss.
While 75 per cent of such losses will be made good immediately, the banks will have to wait for the rest till all attempts of recovery fail.
Any business unit — it may or may not have the MSME tag — which has a Rs 100 crore turnover and Rs 25 crore outstanding bank credit as on February 29, 2020, can get up to 20 per cent of their outstanding debt as fresh loan from the banks, no questions asked.
This pegs the maximum fresh credit for one unit at Rs 5 crore.
Any unit that had not delayed paying an instalment for its existing loan beyond 60 days is eligible for this facility.
Till June 5, 12 public sector banks sanctioned 289,000 such loans and disbursed to 152,000 units.
In value term, Rs 17,706 crore was sanctioned and Rs 8,320 crore disbursed.
These figures have been rising every day.
Union Bank Managing Director and CEO Rajkiran Rai G says his bank’s sanctions crossed 130,000 customers over the weekend and disbursements, Rs 2,000 crore.
Like SBI, most banks’s back offices are busy checking the customers’s credit history and writing the pre-approved loan offer letters.
In the second…