1. Agriculture World

Covid-19 Loans: PSU Banks Sanctioned Rs 5.95 Trillion Loans from 1 March  to 8  May

Tooba Maher
Tooba Maher

The Union finance ministry has recently said that public sector banks (PSBs) sanctioned Rs 5.95 trillion in loans to small businesses, agriculture, retail and corporate sectors from 1 March and 8 May.

The office of FM Nirmala Sitharaman tweeted, “PSBs sanctioned loans worth Rs 5.95 trillion for over 467,400 accounts from the MSME (micro, small and medium enterprises), retail, agriculture and corporate sectors between March 1 and May 8, 2020. Total financing worth Rs 1.18 trillion was given to NBFCs (non-banking financial companies)."

However, the finance ministry had earlier said that the amount of sanctioned loans amid the lockdown indicates that the economy is poised for a recovery. But, the numbers do not reflect the disbursed amount. Last week also the ministry has said that the disbursal of loans will take place soon after the lockdown is over.

Credit growth has been subdued for sometime now. In 2019-20, credit growth was 7.6 percent, driven by lending to non-banking financial companies and large corporates.

According to Care Ratings report of last week “The covid-19 and the subsequent extended lockdown has adversely impacted business activities of SCBs (scheduled commercial banks) because of weak demand & increased risk aversion. Retail loans might witness marginal contraction in credit off-take as consumer demand moderates due to disruptions caused by covid-19."

It added, “From 20 March and 8 May, state-owned banks contacted 97% of borrowers eligible for emergency credit lines & working capital enhancements. Loans worth Rs 65,879 crore were sanctioned, up from the ₹26,500 crore sanctioned as on 4 May."

State Bank of India (SBI) & Bank of Baroda (BoB) are providing pre-approved emergency credit lines, especially to support small businesses that have been hit the hardest by the covid-19 and lockdown. The government & the Reserve Bank of India (RBI) have declared a series of measures to improve credit supply over the past few weeks, so as to support businesses, the middle class and the poor who are suffering the most amid lockdown.

The government has rolled out Rs 1.7 trillion relief package to help mitigate the impact of lockdown, under the newly launched PM Garib Kalyan Yojana (PMGKY). However, experts said the amount was not enough to support economic activity which is hit badly.

Like this article?

Hey! I am Tooba Maher. Did you liked this article and have suggestions to improve this article? Mail me your suggestions and feedback.

Share your comments

Subscribe to our Newsletter. You choose the topics of your interest and we'll send you handpicked news and latest updates based on your choice.

Subscribe Newsletters