59-minute loan scheme to be made effective

New Delhi: The government is reviewing the ambitious 59-minute loan scheme to make it more effective, MSME Minister Nitin Gadkari said here on Tuesday.

The Minister also said a policy was being formulated to reduce imports by increasing use of technology for benefit of micro, small and medium enterprises (MSMEs), which are considered as the backbone of India's economy.

"The 59-minute loan scheme is being reviewed so that there is full disbursement of the loans sanctioned," Gadkari told reporters on the sidelines of a CII event.

The comment assumes significance amid banks expressing concern that small business owners are not enthused with the 59-minute loan scheme. Lack of awareness among MSMEs about the scheme is believed to be one of the reasons behind the tepid response.

Touted as the country's largest online lending platform, the portal was launched by Prime Minister Narendra Modi in November 2018 with an aim to make credit access and banking transparent and hassle-free for MSMEs.

The portal sanctioned loans worth over Rs 35,000 crore in less than four months from its launch. As on March 31, 2019, more than 50,706 proposals had got in-principle approval and 27,893 proposals had been sanctioned.

Under the scheme, business loan in-principle approvals, with /without collateral, are currently provided for value from Rs 1 lakh to Rs 5 crore.

Also, personal loan in-principle approvals are currently provided for value up to Rs 15 lakh and home loan in-principle approvals are currently provided for value up to Rs 10 crore.

Gadkari also said the government was formulating an import substitution policy to reduce the country's inward shipments through use of technology.

"We are sending it to the finance ministry. I think it will be beneficial.

The policy will entail special support for major goods imported which can be produced by MSMEs using technology so that we can become exporters not importers and MSMEs become strong," said Gadkari, who also hold the portfolio of Road Transport and Highways.

More MSMEs should explore the capital market to raise funds, he said, adding that about 20 such companies have been registered on the National Stock Exchange and raised funds from the capital market.