The Finance Ministry has informed that the PSU banks have sanctioned loans worth nearly Rs 6 lakh crore for over 46 lakh accounts for the MSME, retail, agriculture & corporate sectors between the beginning of March and May 8, 2020. FinMin added that a total financing worth Rs 1.18 lakh crore was also provided to NBFCs. In a tweet, Finance Minister Nirmala Sitharaman-led ministry also highlighted that between March 20 and May 8, the PSU banks contacted 97 per cent of borrowers who were eligible for emergency credit lines and working capital enhancements. Thereafter, loans worth Rs 65,879 crore were sanctioned, which was Rs 26,500 crore more than what was sanctioned as of May 4.
FM Sitharaman was scheduled to meet PSU banks’ chiefs yesterday which is now postponed for later this week. Speculations were that FM Sitharaman was about to review issues related to credit flow to key sectors like MSMEs and NBFCs, rate transmission to borrowers, and progress under the targeted long-term repo operations (TLTRO) before the second fiscal stimulus package is released.
The PSU banks have taken the baton amid the ongoing economic crisis in the country. RBI Governor Shaktikanta Das cut repo rate by 75 basis points to 4.4 per cent in March to make the borrowings cheaper and boost demand in the market. The government and RBI have been continuously making efforts to increase lending by the banks. Apart from cutting the repo rate, the external benchmarking of the interest rates has also helped the loans to get cheaper. Consequently, bank credit to the commercial sector saw a major surge in the last week of March. In the fortnight to 27 March, the bank credit of Rs 2.3 lakh crore was disbursed, out of a total of Rs 6 lakh crore in the full year. A sudden spike in the bank credit was observed in the areas of non-food credit and loans, cash credit, and overdrafts.