Prime Minister Narendra Modi’s grand announcement to ease the micro, small and medium enterprises' (MSME) credit woes has been met with a mixed responses
Less than a week after PM Modi announced a new scheme under which MSME could get loans approved through a portal in less than an hour, a CNBC-TV18 report raised questions over the origin and suitability of the owner of the portal, a one-year-old Ahmedabad-based company named CapitaWorld. Since the portal charges an application fee of Rs 1,000, the revenue potential of this young company were also under scrutiny.
Now, fresh concerns have emerged over the efficiency of the scheme itself, with multiple complainants on social media saying that while they paid the application fee and got an in-principle approval, banks have either refused to sanction the loans nor have asked for collateral.
The scheme, in principle, is simple- you log on to the website, create an ID, upload your GST, income tax and director details, a bank statement and details of why you need a loan. If the portal's algorithm thinks you're eligible, it sends your details to one of 20 banks that do their due diligence and will disburse your money in a week's time, compared to the average of 20-25 days that banks take to just process loan requests. However, in practice, things were a little more complicated.
CNBC-TV18 spoke to multiple entrepreneurs who have faced problems– one of them, a Gurugram-based company called AppWorks said that banks had refused to sanction loans approved by the portal multiple times. One bank allegedly asked for collateral worth double the loan amount. On presenting the bank with the details of the scheme as put forth by the PM and Department of Financial Services, the bank allegedly said it was not aware of these guidelines. Other applicants reported being turned down by banks because of inadequate CIBIL scores despite the portal deeming them fit to receive funds.
The portal, however, does mention in its FAQ section that the final call of disbursement of loans rests with the banks themselves.
CNBC-TV18 also spoke to Chandrakant Salunkhe, the founder & president of the SME Chamber of India, who said that multiple members of the Chamber had raised concerns with him about loans being rejected. However, he did not have exact data about the success of the scheme.
Similarly, no data was available from Small Industries Development Bank of India (SIDBI), CapitaWorld, Department of Financial Services, MSME ministry and individual banks.
According to banking sources, the portal had granted in-principle approvals to 31,000 applicants out of 60,000. The State Bank of India was allotted 5,000 of these loans and it sanctioned 2,600 of those. In his presentation to the Rajya Sabha in the first week of November, Modi had said that the pilot project of the scheme had managed to get 73,000 MSME on-board and sanctioned loans worth Rs 23,500 crore. However, details on the disbursal of these loans were not available.