Centre's scheme boosts lending, comforts banks

MUMBAI: The government’s credit guarantee programme and the central bank’s Covid package have triggered an increased flow of credit to the country’s pandemic-hit small businesses, show finance ministry data.National Housing Bank (NHB) and the Small Industries Development Bank of India (Sidbi) have together disbursed nearly ₹50,000 crore in the past two months. State-run banks have sanctioned as much as ₹40,416 crore of this, or nearly 14% of the total target of ₹3 lakh crore under the government’s emergency credit line guarantee scheme, show the ministry data.The government scheme is aimed at encouraging banks and NBFCs to lend to micro, small and medium enterprises that were starved of funds following the pandemic and the lockdown.NHB and Sidbi sanctioned ₹5,539 crore and ₹1,640 crore, respectively, to non-bank finance companies, microfinance institutions and housing finance companies, according to data collated by financial data intelligence provider Propstack.Banks and the state-run financial institutions provide credit to NBFCs and other lenders like microfinance companies, which then on-lend to their customers. State Bank of India alone sanctioned ₹15,950 crore under the credit guarantee scheme, followed by Bank of Baroda at ₹4,987 crore and Punjab National Bank at ₹4,271 crore. As per a CARE Ratings analysis, Gujarat received the highest loan sanctions among states at ₹4,156 crore, followed by Tamil Nadu at ₹4,012 crore.Industry sources said NBFCs were estimated to have filed about ₹12,000-13,000 crore credit applications over a week after public sector banks apparently agreed to their proposals. IIFL Group chairman Nirmal Jain said the company had applied for loans under the scheme and was hopeful of getting the money by the end of the month. Lending under the credit guarantee scheme “appears to be moving well with banks’ willingness to disburse credit”, he said.Shriram Transport, Centrum and Magma are among other NBFCs that have reached out to banks, the sources said. These companies could not be contacted immediately for comment.“There is demand from NBFCs and a lot of in-principle sanctions have been given,” said a senior bank executive involved in the processes. “The sovereign support has given comfort to banks that are now willing to lend,” said Rashesh Shah, the chairman of Edelweiss Group. “We hope to see the cash crunch ending in next one or two months for non-banking companies,” he said.As per Propstack data, NHB sanctioned loans to top-tier housing finance companies like PNB Housing Finance, Tata Capital Housing Finance, Aavas Financiers, Can Fin Homes and Mahindra Rural Housing Finance.

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