PNB, Bank of Maharashtra Lead In Collateral-Free MSME Loans In FY23

New Delhi, Aug 4 (KNN) Among the top public sector banks (PSBs), Punjab National Bank (PNB), Bank of Maharashtra and Union Bank of India are the banks with the maximum number of collateral-free MSME loans up to Rs 10 lakh and Rs 10 lakh to Rs 25 lakh as of March 2023, said Bhanu Pratap Singh Verma, Minister of State for MSME in a written reply to a question in the Lok Sabha.

In the list of 12 PSBs, PNB led the tally with 18 lakh loans amounting to Rs 27,124 crore.

It is followed by 15.20 lakh loans involving Rs 22,783 crore by Bank of Maharashtra and 14.64 lakh loans involving Rs 20,351 crore by Union Bank of India as of March 2023 under the up to Rs 10 lakh collateral-free loan category. 

Within the Rs 10 lakh loan vertical, loans from State Bank of India stood at 9.92 lakh involving Rs 17,406 crore while another leading PSB Bank of Baroda had 13.66 lakh loans amounting to Rs 21,543 crore outstanding as of March 2023. 

SBI and Bank of Baroda had 54,753 and 44,062 loans amounting to Rs 6,869 crore and Rs 5,372 crore outstanding as of March 2023 respectively. 

The Minister further in his response said, “All scheduled commercial banks (excluding Regional Rural Banks) are mandated not to accept collateral security in the case of loans up to Rs 10 lakh extended to units in the MSE sector. Banks are also advised to extend collateral-free loans up to Rs 10 lakh to all units financed under the Prime Minister’s Employment Generation Programme (PMEGP) administered by KVIC.”

He added that banks may, on the basis of good track record and financial position of the MSE units, increase the limit to dispense with the collateral requirement for loans up to Rs 25 lakh (with the approval of the appropriate authority).  (KNN Bureau)