Guaranteeing hassle-free loans, finance minister tells banks

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SBI chief promises fully digitized and ‘simple’ lending process in two months

SBI chief promises fully digitized and ‘simple’ lending process in two months

Indian banks must become friendlier and guarantee hassle-free loans, Finance Minister Nirmala Sitharaman said on Monday, even as the head of the country’s biggest lender, the State Bank of India, promised to roll out an application system. fully digital loan in two months. to ease the plight of borrowers.

State Bank of India Chairman Dinesh Khara, who was among the audience during an industry interaction with the Union Budget Minister in the commercial capital, received a flurry of advice from the finance ministry officials on facilitating access to credit, after a female entrepreneur flagged the need for “no-hassle” loans for budding businesses like hers.

Ms Sitharaman addressed the issue to Mr Khara, saying loans should be hassle-free for everyone and “more so for women”. “Our Prime Minister said, in Mudra and Swanidhi (schemes), where the poorest of the poor are involved, he said to the banks, look, I am the security behind them, don’t ask for any security, give them the loans you want. “they want. And in fact, the performance of servicing those loans has been good. Beyond that, Mr. Khara, the opportunity is yours,” she said.

“Very often for start-ups, more than loans, equity is needed and we are more than happy to support them with loans provided they have the equity,” the chief first noted. of the SBI, before being invited to elaborate. “What is being done now on our end is to make it digital end to end so that loans are processed hassle free from application submission to decision making by means digital. It will make life much easier and it should be ready in about two months,” he added.

Remarking that the SBI chief’s initial reaction was “very bland”, Ms Sitharaman said there was “no harm”, “but banks will have to be much more customer friendly, not to the point of taking negative risks like you do”. t need to take, but you have to be much friendlier to customers.

Revenue Secretary Tarun Bajaj said the SBI, as an industry leader, should “really come up with a system to push credit into the economy”. “I would ask you to take the initiative to ensure that over the next two to three years, the problems of entrepreneurs, MSMEs (micro, small and medium enterprises) and large companies are also addressed”, said- he declared.

“Normally, it is perceived that banks do not sanction loans. Today, my situation is that in one quarter, the underutilization of the BFR fell by about 900 basis points, and still at this level, the underutilization of the BFR still reached 52%. I just wanted to point it out,” the SBI chief stressed. The bank, he said, had set a benchmark of loans up to ₹5 crore to be processed ‘hassle-free’.

On MSME lending, Khara said balance sheet strength-based lending posed challenges and lending could be more “hassle-free” if lenders had access to credible cash flows instead. That, he said, could boost credit growth in the segment to the 16% level seen in retail lending, where credit ratings have made lending easier.

Chief Economic Advisor V Anantha Nageswaran, who was also present, said banks should make loan documents available in local languages, in addition to English, and use the account aggregation framework for loans. “hassle free”.

Economic Affairs Secretary Ajay Seth said providing such ‘hassle-free’ loans should be seen as part of the government’s wider pursuit to improve the ease of living and doing business. “Don’t look at it just as compliances, now you have to look at it on a more granular level, sector by sector, on how to improve productivity,” he summed up.

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