Banks have been asked to extend loans automatically to eligible borrowers without fear of CBI, CVC and CAG, Union finance minister Nirmala Sitharaman said on Saturday.
The government announced the Emergency Credit Line Guarantee Scheme (ECLGS) worth Rs 3 lakh crore for the MSME sector, hit hard by the coronavirus pandemic, as part of its Rs 20.97 lakh crore economic package.
Reports have said decisions in the banking sector are being impacted because of the worry of undue harassment by the Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC) and Comptroller and Audit General (CAG).
Nirmala Sitharaman said clear instructions have been given to CEOs and MDs of public sector banks and financial institutions on Friday that they should not be scared to extend loans as 100% guarantee is being given by the government.
She said in a conversation with BJP leader Nalin Kohli uploaded on the party’s social media platforms that in case of default, the individual bank or official will not be hauled up.
“Yesterday, I reiterated that by saying, if a decision goes wrong and if there is a loss, the government has given 100% guarantee now,” the Union finance minister said.
“It is not at all going to be on the individual official and on the bank, and therefore without fear they should take this automatic route in the sense, everybody eligible for additional term loan and additional working capital should be given,” she added.
Sitharaman said that the finance ministry has taken several steps to allay those fears including withdrawing some of the notifications which were causing fears among bankers.
“…concerns these banks have had in their minds earlier and may have even now are absolutely well-founded. In fact, through my last seven to eight months, I have spent at least three different times with the banks to say that the fear of the 3Cs as they refer to the CBI, CVC, and also the CAG should not be in their minds,” she said.
She expressed hope that liquidity would start flowing from banks without any new collateral from June 1.
The finance minister said during her meeting with bankers that it was emphasised that loans should be sanctioned in a simple manner and if possible digitally to avoid any physical contact.
When asked about criticism about leaving many critical sectors including hospitality, auto and civil aviation in the economic package, Sitharaman said the government has not taken a sectoral approach but a holistic approach.
“Except agriculture and the power sectors where reforms would be undertaken, other than that I have not come up with any sectoral reference. What has now become to be called as MSME package, it includes MSME and also aims at touching others (sectors) too. So the sectors that you are referring to can also benefit through this,” she said.
It is based on the understanding that any enterprise “with a certain exposure to the bank and with a certain invested capital, or with a certain turnover if they need additional term loan, additional working capital in order to buy their own material to restart, in order to be able to pay some fixed cost, it can take that route,” she said.
(With agency inputs)
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