Private banks are dilly-dallying in implementing the Rs 3-trillion credit scheme for the MSME sector, RSS-affiliated industry body Laghu Udyog Bharti (LUB) informed Union Finance Minister Nirmala Sitharaman on Monday.
Sitharaman had called Laghu Udyog Bharti general secretary Govind Lele to seek feedback on the implementation of Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, which has been hit hard by the coronavirus-induced lockdown.
Lele said he informed the minister that prominent public sector banks like State Bank of India and Bank of India have started extending loans as per the scheme, news agency PTI reported.
But at the branch level, three-year projections of revenue and profitability are sought before sanction, he said.
"Private banks are dilly-dallying in implementing the scheme. Hence, they are required to be immediately instructed to implement the scheme," Lele told the finance minister.
He said to complete their target, bank officials are giving preference to high-value loan accounts therefore it is important that the government should instruct for proportionate sanctioning of funds in the scheme.
The LUB has urged Sitharaman to include non-scheduled cooperative banks in the scheme as they have a very large number of MSME loan accounts in their portfolio.
The RSS-affiliated body is conducting a survey on the implementation of the scheme, Lele said, adding that it will be done in a week and the findings will be shared with the finance minister.
Sitharaman had last month announced Rs 3 trillion collateral-free automatic loan for businesses, including MSMEs, as part of the Rs 20 trillion economic package.
The loan would have a four-year tenure with a moratorium of 12 months, she had said.