NEW DELHI: A centralized portal designed to facilitate loans for government schemes has been plagued by a high rejection rate, prompting the finance ministry to step in. The ministry has asked state-run banks to integrate the JanSamarth portal with their lending management systems, speed up disbursals and resolve the factors behind the 43.2% rejection rate in FY26, two people aware of the development said.
Launched in 2022, JanSamarth allows applicants to check their eligibility, apply online, and get instant digital approval across multiple government loan schemes in one place. Ministries and departments use the portal to track the implementation and performance of credit-linked schemes.
The finance ministry has identified incomplete documentation, incorrect information and applicants choosing not to proceed with the loan after receiving in-principle approvals as the main reasons behind unsuccessful applications, the people cited above said on the condition of anonymity. The directions were issued during the Department of Financial Services' review of public sector banks, and underscore the Centre's push to improve conversion rates on the portal.
Improve conversion
The ministry has directed banks to regularly update their business rule engines to reduce customer drop-offs after digital approvals, ensure all authorized branches are onboarded on the portal, strengthen assisted customer journeys through Business Correspondents (BCs), publicize the platform across bank branches, websites and mobile applications, and train bank officials on the available schemes, one of the two people said.
The second person said integrating JanSamarth with banks' lending management systems would improve operational efficiency by enabling end-to-end digital lending and reducing the time taken from application to final disbursal.
“The need to systematically analyse the key reasons behind loan rejections to improve approval rates and overall customer experience cannot be overemphasized,” the second person added.
In FY26, about 13.1 million loan applications were sanctioned through JanSamarth, more than three times FY25's 4 million sanctions.
“The major reasons for the rejection of digitally approved loan applications, applicants being unable to furnish the required documents, submission of incorrect information or data, and applicants choosing not to avail the loan despite applying. Officials believe addressing these issues could significantly improve the portal's conversion rate,” a senior bank official said on the condition of anonymity.
Expanding the platform
In February, the government expanded the scope of JanSmarth, integrating the Credit Guarantee for Micro Enterprises (CGTMSE) and the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. It is also onboarding a new MSME Credit Assessment Model under the DFS and integrating state government schemes from Maharashtra, Rajasthan, Madhya Pradesh, Odisha, Tamil Nadu, Karnataka and Gujarat.
At present, JanSamarth hosts 46 government-backed credit-linked schemes, including the Pradhan Mantri Mudra Yojana (PMMY), PM SVANidhi, Prime Minister's Employment Generation Programme (PMEGP), Kisan Credit Card (KCC), Agriculture Infrastructure Fund (AIF), Deendayal Antyodaya Yojana–National Rural Livelihood Mission (DAY-NRLM), Startup Loans, Rooftop Solar Installation Financing, Fisheries Kisan Credit Card, Home Loan Scheme for EWS/LIG/MIG beneficiaries, Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS), Weaver Mudra Scheme, and the recently added ECLGS 5.0 and Micro Credit Cards for MSMEs.
Emails sent to the finance ministry, the Indian Banks' Association (IBA), the Reserve Bank of India (RBI) and all 12 PSBs remained unanswered.
Experts said cutting processing time alone would not reduce rejection rates unless the quality of loan applications also improves.
Application quality
"Reducing loan processing time is important, but improving application quality is equally critical. Many applications are rejected due to incomplete documents or incorrect information rather than lack of eligibility. This is where business correspondents can make a meaningful difference," said Lokanath Panda, chief operating officer of BLS E-Services Ltd, a technology-enabled digital service provider.
"By guiding applicants on documentation, verifying details at the source and creating awareness about government schemes, BCs can improve application success rates, reduce rejections and help JanSamarth reach more deserving beneficiaries, especially in rural and semi-urban India," Panda added.
Dharanidhar Tripathy, chief executive, Business Correspondent Resource Council, New Delhi, said the ministry's directions would help strengthen digital lending if implemented effectively.
"This is a good initiative to augment credit dispensation and digital adoption of government-backed schemes and other priority sector lending. Once integrated with banks' Lending Management Systems, proposals can be processed much faster as applicant information can seamlessly synchronize with bank systems," he said.
Tripathy added that business correspondents should be adequately compensated for assisting borrowers, particularly in rural areas.