Mudra loans: banks disburse nearly 100% of the amount sanctioned in the first half of fiscal 22 even as concerns about the NPA persist


For the current financial year, a penalty target of Rs 3.00 lakh crore has been set for member credit institutions.

Credit and financing for MSMEs: Credit disbursements by public and private lenders, small finance banks, non-bank financial corporations and other credit institutions under the Mudra loan program amounted to 95% of the amount sanctioned in the first half of the 2021-2022 fiscal year. , official data showed. The Pradhan Mantri Mudra Yojana (PMMY) Self-Employment and Entrepreneurship Promotion Program, launched by Prime Minister Narendra Modi in 2015, is dedicated to micro-enterprises, which are generally proprietary businesses at the bottom of the entrepreneurial pyramid, looking for loans up to Rs 10. lakh. The disbursement rate for the first quarter of fiscal 22 was 87 percent of the amount sanctioned.

Out of Rs 1.13 lakh crore involved in sanctioned 2.03 crore loans, Rs 1.07 lakh crore loans were disbursed from April 1 to October 8, according to provisional data on the program portal. The disbursement rate for the previous FY21, however, had fallen to 94.7% from 97.6% for FY20, which had increased slightly from 97% for FY19.

“While the loans are disbursing, but if you are really deep in the disbursements, the basic situation is that the majority of these borrowers are not the ones who really deserve it, but the people who have been in the network or the circle. close to bank employees. From what I have studied, deserving borrowers find it difficult to get loans. This is the reason why a large number of Mudra loans will not be recovered. The intention behind the Mudra loan is not being met by the banks, ”Jacob Crasta, president of environmental test chamber maker CM Envirosystems and founder and director of the Indian MSME Alliance told Financial Express Online. The three-year-old Indian MSME Alliance was started by former MSME secretary Dinesh Rai.

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The high rate of disbursements has grown in importance against a backdrop of growth in Mudra loans turning into non-performing assets due to the impact of Covid on the repayment capacity of borrowers. For example, gross NPAs for all lenders including public banks, private banks and small financial banks in Maharashtra increased to 22% at the end of June 2021 from 14.94% at the end of June of l last year, The Indian Express reported last year. month citing bankers and data analysis of state-level bankers committees. Maharashtra’s outstanding Mudra loans amounted to Rs 24,850 crore, while the total NPA was worth Rs 5,521 crore.

“Because of Covid, even large and medium-sized businesses are struggling to repay their loans. The problem is acute in the case of Mudra loans intended for micro and small enterprises. NPA stress was expected even as banks were urged to deploy loans. So banks have to disburse loans under these programs anyway, while the government has to ensure that businesses have access to credit through banks, ”DK Aggarwal told Financial Express Online, president and chief executive officer of SMC Investments and Advisors.

Overall, the share of NPAs of public sector banks is estimated to have increased more than three times at the end of June 2021 compared to FY20, according to the report citing Bankers. For the data available until the end of March 2021 for the Chhattisgarh, the NPAs were at Rs 442.56 crore or 9.8% of the disbursements amounting to Rs 4,518.01 crore at March 31, 2021, compared to the NPAs of Rs 320.12 crore or 12.55%. disbursements of Rs 2,551.24 crore as of March 31, 2020.

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“While large businesses have the capacity to recover, micro businesses will take longer to recover from the impact of Covid in terms of revenue or revenue. As a result, loan repayments have been difficult for these borrowers and hence it is also difficult for banks to avoid the risk of NPA. There is a dilemma for banks as they have to continue to lend on the one hand and also control the resulting NPAs on the other hand. So banks are also responsible for defaults, ”a former banker at a public sector bank told Financial Express Online.

For the current fiscal year, a sanction target of Rs 3 lakh crore has been set for member credit institutions, Finance Minister Nirmala Sitharaman said in August this year in a statement. It is important to note that the amount sanctioned in the last three fiscal years has already exceeded the target for the current fiscal year – Rs 3.21 lakh crore sanctioned in FY19, Rs 3.37 lakh crore in FY20 and Rs 3.21 lakh crore in FY21. At the end of March 2021, more than 29.55 crore of Mudra loans amounting to Rs 15.52 lakh crore had been sanctioned since the launch of the program.

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