Home > News > India > FM reviews readiness of PSBs to implement stimulus package

NEW DELHI : Finance minister Nirmala Sitharaman on Friday met heads of all public sector banks (PSBs) to discuss ways to inject liquidity into the system, sanction and disburse loans and execute schemes that fall under the 20 trillion economic package.

PSBs have sanctioned 6.68 trillion in loans to small businesses, retail, agriculture and corporate sectors between 1 March and 19 May, an indication that there has been a steady increase in credit availability for these vital sectors, the finance ministry said.

While disbursing loans was a challenge due to the lockdown, a senior government official said that the situation on the ground is expected to improve.

“With the easing of the lockdown (earlier this week), disbursals have kicked off. Companies will take loans as and when they need funds. Demand revival is the key. But we expect economic activity to slowly pick up," a senior government official told Mint.

However, a senior official at a state-run bank said while the government and the Reserve Bank of India have been taking steps to support the banking system as well as businesses, implementation of the schemes may not happen until the lockdown is lifted completely.

“Coronavirus has created a lot of uncertainty. Businesses are yet to ascertain the full impact of covid-19. That’s why disbursal is hardly taking place," the official said.

Last week, Sitharaman announced immediate relief measures as well as long-term reforms to help the poor, farmers and businesses affected by the lockdown. Support measures included extra working capital finance of 20% for small businesses with an outstanding debt of up to 25 crore and sales of up to 100 crore that have not defaulted on loan repayments.

“To operationalise the announcements made by finance minister Nirmala Sitharaman under AatmanirbharBharat, review meeting through VC (video conference) was held with all PSBs. Everyone aligned on the need for quickly addressing the needs of MSMEs & other customers. Operational details to be released soon," the finance ministry’s department of financial services said in a tweet.

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