Public sector banks disbursed Rs81,781 crore, including new term loans of Rs 34,342 crore during the first phase of the Customer Outreach Initiative from Oct.1-9 and sanctioned Rs 39,068 crore to NBFCs from Sept.19-Oct.10, the Finance Ministry said.

Finance Minister Nrimala Sitharaman reviewed the performance of Public Sector Banks (PSBs) in a meeting with bank chief executives.

Credit and implementation of measures announced to support economic growth were reviewed in-depth.

The review stated that PSBs have continued to support the NBFC/HFC sector.

Since the IL&FS default in September 2018 till Oct.10, 2019, PSBs have sanctioned total support of Rs3,97,557 crore in the form of credit as well as pool-buyouts of Rs 1,07,792 crore, including Rs15,455 crore under the newly launched Partial Credit Guarantee Scheme.

Disbursement by PSBs to NBFCs has been Rs39,068 crore since the last review on Sept.19 till Oct.10.

“PSBs disbursed Rs 81,781 crore, including new term loans of Rs34,342 crore during the first phase of the Customer Outreach Initiative, from 1st to 9th October 2019. Banks shared their plans for the second phase of the Customer Outreach Initiative, with camps in about 150 districts between Oct.21st to 25, 2019, building on the momentum already built. As in the first phase, NBFCs would also participate in the second phase.

“Further, receivable bill discounting for MSMEs would also be a focus area.

“Details of specific dues outstanding of the companies, including MSME, with the corporates and aggregating approximately Rs 40,000 crores will be shared by the Ministry of Corporate Affairs with banks for reaching out to MSMEs during the Customer Outreach Initiative for bill discounting and enabling MSMEs to access working capital, the statement said.

In addition, home loans, vehicle loans, agriculture loans, education loans, and other MSME and personal loans would be focused upon. It was reiterated that the outreach would be without any dilution in diligence or underwriting standards. It was also noted that with the recent recapitalisation of over Rs55,000 crore, PSBs are well equipped to support credit needs, it said.

The PSB’s chief executives informed that they will continue expeditious disbursement of pool buy-outs including those sanctioned under the Partial Credit Guarantee Scheme. Government would also issue suitable clarifications to banks with a view to expedite processing of proposals under the scheme.

Meanwhile the Finance Minister Nirmala Sitharaman on Monday said PSBs have disbursed about Rs82,000 crore in the nine-day outreach programme to push up retail credit and banks have witnessed robust demand during that period and she has asked the banks to look at the scope of MSMEs’ demand for bill discounting.

Bill discounting is a discount/fee which a bank takes from a seller to release funds before the credit period ends. Bill discounting is mostly applicable in scenarios when a buyer buys goods from the seller and the payment is to be made through letter of credit.

Earlier Finance Secretary Rajeev Kumar said “Finance Minister Nirmala Sitharaman today reviewed the credit growth progress in the public sector banks and they have reported that they have disbursed Rs 81,781 crore in retail in the nine days of the outreach programme and have followed the prudential norms in the credit outreach.

During this period of nine days, PSBs have given Rs 34,342 crore to new businesses. PSBs have said they have sufficient liquidity.”

The second outreach programme will start on Oct.21.

In the meeting, Kumar said big corporates owe Rs 40,000 crore to MSMEs and banks have been told to look at the option of doing bill discounting for MSMEs.

“Big corporates owe Rs 40,000 crore to MSMEs. PSBs will have an outreach programme on bill discounting. MCA (Ministry of Corporate Affairs) has a list of big companies who owe money to MSMEs. PSBs will ask concerned MSMEs if they are interested in bill discounting,” Kumar said.

Sitharaman said “We have asked and will push for big companies to expedite payments to MSMEs and have asked the banks to come back to us on MSMEs’ payment by October 22 on demand for bill discounting”.

Indo-Asian News Service