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Extend Govt’s ‘PSBLoansIn59Minutes’ Service To Startups: MSME Committee 

Extend Govt’s ‘PSBLoansIn59Minutes’ Service To Startups: MSME Committee 

The limit of the loans should be enhanced to INR 5 Cr

The applications should be disposed of 7-10 days from the time they get in-principle approval from the platform

The platform should be linked to land records, CERSAI and CGTMSE

Inc42 & Dell are bringing the startup ecosystem together for The Dialogue on June 27 to celebrate MSME Day 2019 and help startups, tech giants navigate the MSME market, opportunities, and challenges to help them efficiently work with this vibrant sector. We invite all startups, investors, and other stakeholders from the Indian MSME ecosystem to come and enrich the roundtable dialogue.

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An expert committee on micro, small and medium enterprises has proposed RBI to extend the benefits of a government-run online portal, PSBLoansIn59Minutes to startups. The MSME committee, which had eight other specialist members, submitted the report on June 19.

“The PSBLoansIn59Minutes portal as of now caters only to existing entrepreneurs having the information required for in-principle approval such as GSTIN, Income Tax returns, bank statement, etc. The Committee recommends that the portal should also cater to new entrepreneurs, who may not necessarily have such information, including those applying under PMMY loan and Standup India,” the report shared by the committee mentioned.

MSME sector currently contributes about 45% to manufacturing output, more than 40% of exports, over 28% of the GDP while creating employment for about 111 Mn people, which in terms of volume stands next to the agricultural sector. However, the sector is plagued with its own issues and remains informal and vulnerable to structural and cyclical shocks, at times with persistent outcomes.

Thus, in the fifth bi-monthly monetary policy statement for 2018 -19, dated December 5, 2018, RBI announced to constitute an Expert Committee on Micro, Small and Medium Enterprises under the chairmanship of Shri U K Sinha.

What Is PSBLoansIn59Minutes?

In September 2018, the union minister of Finance and Corporate Affairs, Arun Jaitley launched a web platform PSBLoansIn59Minutes to enable in principle approval for MSME loans up to INR 1 Cr within 59 minutes from SIDBI and 5 Public Sector Banks (PSBs).

It is a strategic initiative of SIBDI led PSB consortium incubated under the aegis of Department of Financial Services (DFS), Ministry of Finance. This reduces the turnaround time from 20-25 days to 59 minutes. Subsequent to this in principle approval, the loan will be disbursed in 7-8 working days.

The key features of the platform include:

  • The loans are undertaken without human intervention till sanction and or disbursement stage
  • MSME borrower is not required to submit any physical document for in-principle approval.
  • The platform read and analyse data points from various sources such as IT returns, GST data, bank statements, MCA21 etc. in less than an hour while capturing the applicants basic details using smart analytics from available documents.

Key Points Raised By The MSME Committee

In its report to RBI, the MSME committee suggested that limit of the loans should be enhanced to INR 5 Cr. The applications should be disposed of 7-10 days from the time they get in-principle approval from the platform. It was also recommended that the portal should be linked to land records, Central Registry of Securitisation Asset Reconstruction and Security Interest and Credit Guarantee Fund Trust for Micro and Small Enterprises.

Further, loans sanctioned under Standup India and MUDRA should be included in portal and algorithms leading to initial in-principle sanction but final rejections by the banks’ need to be reviewed in a time-bound manner.

The MSME committee has suggested the formation of a joint working group of the Indian Banks’ Association and Sidbi to iron out issues pertaining to the creation of new MSME lending products and reducing turnaround time during the centralised sanctions stage.

The MSME Committee also recommends a more focused engagement of SIDBI with state governments for MSME development and promotion, including collaborating with State Governments to get MSME units from the State onto digital platforms such as PSBLoansIn59Minutes.

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