Now SMEs can avail loan up to Rs 1 crore in 59 minutes: What you need to know?

These loans will be sourced from the Small Industries Development Bank of India (SIDBI) and five other public sector banks

Loans of up to Rs 1 crore to SMEs in 59 minutes? Read on to know more

Micro, Small and Medium Enterprises (MSMEs) are the second largest group of employers in India. This segment, however, finds it difficult to arrange capital requirements though regular banking channels.

In a bid to boost credit availability to MSMEs, PM Narendra Modi introduced a slew of measures in November this year that would fast-track such credit requirements.

Of the 12-point action plan announced by Modi, the most noteworthy is loan availability up to Rs 1 crore within 59 minutes for GST-registered MSMEs.

This will be undertaken through a dedicated digital portal.

Related: Types of personal loans you must know about 

The web portal will set new benchmarks in loan processing, shaving off the turnaround time from 20-25 days to just 59 minutes.

These loans will be sourced from the Small Industries Development Bank of India (SIDBI) and five other public sector banks – State Bank of India, Indian Bank, Punjab National Bank, Bank of Baroda, and Vijaya Bank. 

If applied for on the website, in-principle loans will not require any physical documentation and disbursal can be expected within 7-8 working days. The entire process is digitised and there will be no human interaction until the sanction and disbursal stage.

Related: Types of personal loans you must know about 

It is the only platform with a bank interface that covers branch-level integration for maker-checker-approver systems that allow for speedy assessment.

The portal uses sophisticated algorithms for analysis and uses data from multiple sources such as bank statements, GST, IT returns, MCA21, points, etc. to assess loan eligibility.

Related: Ever heard of loans that help you save money? 

Other key features:

  • Interest rates starting as low as 8%
  • Flexible interest cost based on the credit rating of the business
  • No collateral required as the loans are attached to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme 
  • Additional eligibility on loans up to Rs 2 crore without any collateral
  • Rebate or interest subvention of 2% on the incremental Rs 1 crore loan
  • Increase in the interest subvention rate from 3% to 5% for export-based MSMEs on pre- and post-shipment credit
  • There is a convenience fee of Rs 1000 + GST on all in-principle approvals and 0.35% commission on the loan amount disbursed

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