Public sector banks (PSBs) are likely to regain market share in loans to the micro, small and medium enterprise (MSME) segment, as the recently launched online lending portal, psbloansin59minutes.com, will help them crunch the turnaround time (TAT) for loan proposals, according to a top SIDBI official.
What is TAT?
TAT, which is the number of days between the date of enquiry and the date of loan sanctioned or renewal date, was the longest for PSBs at 31 days for MSME loans in 2018, as per a TransUnion CIBIL-SIDBI joint report.
Among lenders, non-banking finance companies have the best TAT of 18 days, followed by private sector banks at 29 days.
Manoj Mittal, Deputy Managing Director, Small Industries Development Bank of India (SIDBI), said: “The MSME sector presents huge opportunity for banks to lend. Roughly 90 per cent of the units are not linked to the formal financial institutions.
“Within the sector, small loans are witnessing good growth. But the market share of PSBs is going down.”
The TransUnion CIBIL-SIDBI joint report said the market share of PSBs in MSME lending declined to 50.7 per cent in June 2018 from 55.8 per cent in June 2017 (59.4 per cent in June 2016).
NBFCs and private banks continue to garner market share, it added.
The online lending portal, which requires borrowers to upload details pertaining to Goods & Service Tax, Income Tax Returns, Bank Statement, Directors/Partners/Proprietor, and loan required, will help PSBs claw back market share, said Mittal, adding that if an MSME ticks all the boxes, then it can get an in-principle loan approval in less than an hour.
“So far, the major challenge for micro and small enterprise entrepreneurs was that they did not know whether they should approach X branch or Y branch for a loan. Even if he goes to the branch, he is not sure whether he will be entertained or not.
“But if he has an in-principle letter, which has gone to the branch as well as Head Office (HO) via the portal, the proposal will be monitored at the HO-level also. The customer can select which branch he wants to avail the loan from,” explained a SIDBI official.
Mittal said 20 PSBs and SIDBI are part of the lending portal, which is owned by CapitaWorld Platform Pvt Ltd. MSMEs can avail loans ranging from ₹1 lakh to ₹1 crore via the portal.