The government has asked banks to clear by March 15 about 1.18 lakh pending loan applications under the Prime Minister Employment Generation Programme (PMEGP), which promotes self-employment through setting up of micro enterprises, an official statement said on Thursday.
At a meeting held on Wednesday, MSME Minister Nitin Gadkari and Finance Minister Nirmala Sitharaman discussed with senior management of banks the issue of restructuring of stressed loans to MSMEs, an official statement said.
The ministers commended the work done by banks in supporting and setting up a large number of enterprises under the credit linked subsidy scheme PMEGP over the past year, which has seen a two-fold increase in the last financial year when more than 73,000 micro enterprises were assisted.
To give further boost to the scheme, the target in the current year has been increased to support the establishments of 80,000 units.
In the current year, more than 46,000 units have already been provided with loans by the various banks and additionally 22,000 loan applications have also been sanctioned and are awaiting disbursement, the release said.
"Banks were requested to release the loans in such approved cases immediately. Besides, the banks were requested to take up about 1.18 lakh pending loan applications latest by March 15, with special emphasis on North Eastern Region (NER)," it said.
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Heads of the banks, the release added confirmed that they will clear all pending cases by March 15.
Data analysis of applications rejected by banks revealed that 11 per cent of the proposals are rejected because the targets given to local banks under PMEGP are met.
To address this issue, banks were requested to increase lending under the scheme and revise their policy of fixing minimum targets so that all eligible applications can be considered for sanction.
Similarly, it was found that 11 per cent of the applications are also rejected since the applications received by the banks were outside their service jurisdiction.
Accordingly, banks were also asked to devise a mechanism whereby such an application can be automatically transferred to other appropriate branches in the area.
Besides, discussions were also held with banks on increasing the reach of credit guarantee scheme, the release said.
The government has set a target of increasing the credit guarantee to Rs 50,000 crore under the scheme, which is a jump of about 67 per cent over the last year.