Indian Government launches new initiative in MSME credit space
The Indian Government has launched a new portal (psbloansin59minutes.com) to enable in principle approval for MSME loans up to Rs. 1 crore within 59 minutes from SIDBI and 5 Public Sector Banks (PSBs). It is a strategic initiative of SIBDI led PSB consortium incubated under the aegis of Department of Financial Services (DFS), Ministry of Finance.
The Portal reduces the turnaround time for loan processing from 20–25 days to 59 minutes. Subsequent to this in principle approval, the loan will be disbursed in 7–8 working days.
“The portal integrates advanced fintech to ensure seamless loan approval and management. The loans are undertaken without human intervention till sanction and or disbursement stage,” the ministry said in a statement.
A User Friendly Platform has been built where MSME borrower is not required to submit any physical document for in-principle approval. The solution uses sophisticated algorithms to read and analyse data points from various sources such as IT returns, GST data, bank statements, MCA21 etc. in less than an hour while capturing the applicants basic details using Smart analytics from available documents. The system simplifies the decision making process for a loan officer as the final output provides a summary of credit, valuation and verification on a user-friendly dashboard in real time.
It enables bankers to create Loan Products in line with the Scoring models & assessment methods within their approved credit policy. It features an integrated GST, ITR, Bank Statement Analyzer, Fraud Check and Bureau Check. This is the only platform that has been integrated with CGTMSE for checking the eligibility of Borrowers. MSME borrower gets loan up to Rs.2 crore without any collateral.
Majority stake in the platform is held by SIDBI & big 5 PSBs- SBI, Bank of Baroda, PNB, Vijaya and Indian Bank.
The platform was launched by Union Minister of Finance and Corporate Affairs, Arun Jaitley.
Performance of Public Sector Banks
He reviewed the performance of the Public Sector Banks (PSBs) with their Chief Executives and other Whole-time Directors in New Delhi.
Arun Jaitley said the Formalisation of the Indian Economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks, and coupled with inclusive growth through massive financial inclusion, has unlocked purchasing power which will drive India’s growth. The Finance Minister said that this should help India sustain a growth rate of around 8%. A growing economy will also help banks grow in strength, he added. Conversely, as lifelines of the economy, banks would need to build their strength to support the lending needs of a growing economy.
A number of action points were identified for implementation in the remainder part of the current Financial Year (FY) 2018–19.
- Targeting recovery of Rs. 1,80,000 crore, up from Rs. 74,562 crore in last FY
- Mobilising over Rs. 18,500 crore through monetisation of banks’ Non-core assets in the current FY for strengthening their capital base
- Complete rationalisation of foreign operations of PSBs by March 2019, with closure/consolidation of 57 branches/offices
- PCA banks would pursue their Quarterly Performance Milestones, including improvement in their lending risk profiles through a 6% reduction in Credit RWA to Advances Ratio and 8% reduction in Cost to Income Ratio. Banks’ performance was on track during Q1.
- Banks would complete action by December 2018 on fraud detection and initiation of action in respect of NPAs with outstanding of above Rs. 50 crore.
- Banks would put in place by December 2018 effective monitoring, vigil on early warning signals, and timely action before accounts turn NPA. These include — Independence of stock audit from branches, Timebound closure of stock audit observations, Regular review of CIC reports on borrowing entities and promoters, Timely settlement / resolution plans before account turns NPA, Invocation of personal guarantee before account turns NPA
- Comprehensive recovery action within Q3: Transfer NPAs above Rs. 50 crore to Stressed Asset Management verticals; Integrated case databases for all NPAs, with MIS; Completion of documentation in DRT and SARFAESI filings; Create database of auctionable properties and proactively publicise
- End-to-end OTS platform for all online & offline OTS proposals by March 2019
- Banks were advised to modernise more branches to enable self-service for customers in digital mode. The goals set for financial inclusion were : Opening Jan Dhan accounts with RuPay cards to cover all adults, Coverage of uncovered families under Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana; Deployment of Bank Mitras in 8,808 villages, reactivation of Bank Mitras in 5,798 villages, opening of branches in 72 LWE-affected districts and of 124 branches / Business Correspondents in Aspirational Districts by October 2018; Onboarding of PSBs on National Common Mobility Card for “One Nation One Card”; Activation of all 13,639 Aadhaar Enrolment Centres in PSB premises by October 2018
The Finance Minister also underscored the need to trust and confidence in the Banking System as a necessary precondition for meeting the needs of the economy. With the recent amendment to the Prevention of Corruption Act, there now need not be any apprehension in the minds of bankers in supporting investments that are in the best interests of the economy, the nation and the banks. At the same time, he exhorted the banks to ensure all steps at their end to ensure clean lending and effective action in cases of fraud and wilful default, to justify the trust reposed in banks. Banks must strive to be seen always as institutions of clean and prudent lending, the Finance Minister concluded.
Financial Inclusion Index
Arun Jaitley also launched the Financial Inclusion Index after his Annual Performance Review Meeting with CEOs of the Public Sector Banks in New Delhi today. Department of Financial Services (DFS), Ministry of Finance will release an Annual Financial Inclusion Index (FII) which will be a measure of access and usage of a basket of formal financial products and services that includes savings, remittances, credit, insurance and pension products. The index will have three measurement dimensions; (i) Access to financial services (ii) Usage of financial services and (3) Quality.
The single composite index gives a snap shot of level of financial inclusion that would guide Macro Policy perspective. The various components of the index will also help to measure financial services for use of internal policy making. Financial Inclusion Index can be used directly as a composite measure in development indicators. It enables fulfilment of G20 Financial Inclusion Indicators requirements. It will also facilitate researchers to study the impact of financial inclusion and other macro-economic variables.
This will be released on January, 2019.
