Finance Minister tells banks to ensure hassle free loansAuthor: Nishu February 21, 2022
SBI chief promises fully digitized, ‘hassle free’ lending process in two months
Indian banks need to become more customer-friendly and ensure hassle-free loans, Finance Minister Nirmala Sitharaman said on Monday, even as the head of the country’s largest lender State Bank of India completed the completion in two months. Promised to launch a digital loan application system. To ease the lot of borrowers.
State Bank of India chairman Dinesh Khara, who was part of the audience at an industry interaction with the minister on the Union Budget in the commercial capital, received a flurry of advice from top finance ministry officials on easy access to credit after a woman. The entrepreneur flagged the need for ‘hassle free’ loans for budding businesses like himself.
Ms Sitharaman directed the question to Mr Khara saying that loans should be hassle free for all and ‘more so for women’. “Our PM has said, in Mudra and Svanidhi (schemes), where the poorest of the poor are involved, he told the banks that look, I am the security behind them, don’t ask for any security, give them the loan they want. And in fact, the performance on servicing those loans has been good. Other than that, Mr. Khara, the opportunity is yours,” she said.
“Often for start-ups, equity is required more than debt and we are more than happy to support with loans, provided they have equity,” said the SBI chief at the outset, prompting to elaborate. First. “Actually what is being done at our end now is to make it digital end-to-end so that hassle-free loan addressing, from filing applications to taking decisions through digital means. This will make life a lot easier. And it should be ready in two months,” he said.
Commenting that the SBI chief’s initial reaction was ‘very soft’, Ms Sitharaman said there is ‘no harm’, “but banks will have to be much more customer-friendly, and not to the extent that you risk the adverse Pick doesn’t need to be a pick, but you need to be more friendly towards customers.
Revenue Secretary Tarun Bajaj said SBI as an industry leader should “really work on some mechanism to push credit forward in the economy”. “I would request you to take the lead in the next two-three years to see that the issues of entrepreneurs, MSMEs (Micro, Small and Medium Enterprises) and large businesses are also sorted out,” he said.
“Generally, it is assumed that banks do not sanction loans. Today, my position is that in one quarter, the underutilization of working capital limit has decreased by about 900 basis points, and still at that level, underutilization of working capital is still as high as 52%. I just wanted to bring this to notice,” the SBI chief said. He said the bank had set a benchmark to process loans up to ₹5 crore ‘hassle free’.
On lending to MSMEs, Mr Khara said credit based on balance-sheet strength posed challenges, and if lenders have access to reliable cash flows, lending could be more ‘hassle-free’. This, he said, could boost credit growth in the segment to the level of 16% seen in retail lending, where credit scores have made lending easier.
Chief Economic Adviser V Anantha Nageswaran, who was also present, said banks should provide loan documents in local languages other than English and use the account aggregator framework for ‘hassle-free’ loans.
Economic Affairs Secretary Ajay Seth said providing such ‘hassle-free’ loans should be seen as part of the government’s wider effort to make life and business easier. “Don’t just look at it as compliance, now it has to be looked at at a more granular level, sector by sector, on how to improve productivity,” he summarized.