Lenders demands govt's guarantee on all MSMEs loans

New Delhi, Apr 22 (KNN) Amid lockdown, most of the Micro Small and Medium Enterprises (MSMEs) are on the verge of collapse.

The Indian Banks’ Association (IBA), has suggested that the government to guarantee all incremental loans to small businesses.

Bankers believed that a guarantee by the government will help them in providing loans to MSMEs as they were will government to look after it, if anything goes wrong.

According to the bankers, the sector needs incremental loans of at least Rs 50,000 crore.

Banks have suggested that these loans could be disbursed through a portal like the psbloansin59minutes.com, which generates immediate in-principle approval for borrowers.

The portal uses algorithms to analyse data from the goods and services tax (GST) database, income tax (IT) returns and bank statements to decide on eligibility. Once the proposal to backstop loans is accepted by the government, banks will open their purse strings to lend to the sector and then apply for the guarantee cover. At present, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme guarantees 50-85 per cent of loans up to Rs 2 crore.