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Despite the havoc wreaked by the Covid-19 pandemic, loans worth ₹40,473 crore have been sanctioned to small businesses in the first four months of the current financial year under the Pradhan Mantri Mudra Yojana (PMMY).
According to provisional data available with Mudra, loans totalling ₹35,386 crore have been disbursed as on July 31, 2020.
“The performance is almost the same as during the same period last year, which itself is noteworthy given the disruption to business,” a senior official of Mudra told BusinessLine .
The loan disbursal was expected to be much lower.
However, many rural bank branches and MFIs did disburse small business loans as the lockdown impact and the incidence of the pandemic were relatively low in rural areas till recently, according to bankers.
Rural economy not hit hard
According to BR Diwakar, Chief Financial Officer, CreditAccess Grameen Ltd, the rural economy has not been hit as hard by Covid-19 as made out.
“The demand for small business loans has not seen any bottlenecks in recent months and has been strong,’’ he said. “Liquidity to rural economy is very important at this juncture,” said Bhagwan Chowdhry, Area Leader and Professor of Finance, Indian School of Business.
“Apart from the public sector, it is also important to bring in private participation in enhancing liquidity,” he added.
Pick-up in second half
Mudra loan disbursal has tended to be slow in the first and second quarters, even during pre-Covid times, and tend to pick up during the second half of the financial year.
For instance, both in FY19 and FY20, more than half of the total loans were disbursed only in the last four months of the fiscal.
In the financial year ended March 31, 2020, the total sanctioned amount was at ₹3,23,574 crore as on March 27, compared to ₹3,21,723 crore during the financial year ended March 2019.
At the same time, there have been concerns about bad loans.
“However, in view of the Covid-19 situation and the moratorium on terms loans, banks are expected to review their non-performing assets (NPAs) after September as the focus is now on providing liquidity,” said a senior SBI official.
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