Punjab National Bank (PNB) became the leading public sector bank (PSB) to provide the maximum number of collateral-free MSME loans in the fiscal year 2022-23 (FY23).
PNB led the list of 12 PSBs in two categories of MSME loans, the first of up to Rs 10 lakh and the other of Rs 10 lakh to 25 lakh loans. MSME Ministry’s Minister of State, Bhanu Pratap Singh Verma, shared the data with the Parliament on Thursday. Apart from PNB, Bank of Maharashtra, State Bank of India, Bank of Baroda, and Union Bank of India were other top-performing banks in the public sector, as reported by Financial Express.
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Under the Rs 10 lakh loan category, PNB came on top with 18 lakh loans worth Rs 27,124 crore distributed as of March 2023. Following it was the Bank of Maharashtra with 15.20 lakh loans worth Rs 22,783 crore and the Union Bank of India with 14.64 lakh loans worth Rs 20,351 crore.
Other worthy performers in the category included the State Bank of India with 9.92 lakh loans worth Rs 17,406 crore and the Bank of Baroda with 13.66 lakh loans worth Rs 21,543 crore as of March end, 2023.
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In the Rs 10 lakh to Rs 25 lakh category, PNB came out on top with 1.07 lakh loans amounting to Rs 13,247 crore. The Bank of Maharashtra reported 82,389 loans worth Rs 11,206 crore and the Union Bank of India gave out 72,296 loans amounting to Rs 18,570 crore.
This category also had SBI and Bank of Baroda as noteworthy contributors with 54,753 and 44,062 loans worth Rs 6,869 crore and Rs 5,372 crore as of March 2023 respectively.
Comparatively, SBI reported the best performance under both categories for the fiscal year 2021-22 (FY22). For the up to Rs 10 lakh loan segment, SBI reported 18.61 lakh loans worth Rs 28,297 crore and for the Rs 10 lakh to 25 lakh category, the bank reported 88,247 loans amounting to Rs 11,357 crore, as of March end 2022.
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The minister elaborated in his response, “All scheduled commercial banks (excluding Regional Rural Banks) are mandated not to accept collateral security in the case of loans up to Rs 10 lakh extended to units in the MSE sector. Banks are also advised to extend collateral-free loans up to Rs 10 lakh to all units financed under the Prime Minister’s Employment Generation Programme (PMEGP) administered by KVIC.”
He further noted that banks had the agency to increase the limit to dispense with the collateral requirement for loans up to Rs 25 lakh, with authorised approvals, on the basis of the credibility and financial capability of the MSE units.
The report further added that credit outstanding to the MSME sector by commercial banks increased 12.3 per cent to Rs 22.6 lakh crore in FY23 from Rs 20.11 lakh crore in FY22, as per data shared by the ministry recently.
