State-run banks may approve personal, auto and home loans online in 59 minutes, according to a proposal that they discussed with Union finance minister Nirmala Sitharaman as one of the measures to create demand and boost the economy, officials aware of the discussions said, requesting anonymity.
The discussions were first of a series of meetings that the government has planned over the next week with executives of several industries, Sitharaman said on Monday, promising steps to improve the state of the economy “fairly quickly”.
India’s economy has been facing a slowdown for about a year. The core sector growth in June slowed to 0.2%, the lowest monthly growth since May 2015, and weak demand forced many automobile companies to temporarily halt production.
Among the interventions discussed on Monday was easing access to credit. The bankers suggested the in-principle approval limit on psbloansin59minutes.com portal, which is meant for micro, small and medium enterprises (MSMEs) businesses, be raised from Rs 1 crore to Rs 5 crore.
It also suggested opening up the portal to retail customers looking for home, car or personal loans, said one of the officials, asking not to be named.
Launched on November 2 by Prime Minister Narendra Modi, the 59-minute loan portal—which lets businesses apply for instant loans without having to visit banks—has led to 1.3 million loans being sanctioned till July 17, the finance ministry said in a statement to the Rajya Sabha.
“It certainly helps borrowers as it makes the process easy for them, but banks will not give loans without proper verification and documentation. Extending the same for personal and housing loans may help revive demand in sectors such as automobiles,” said a senior executive of a leading government-run bank, asking not to be named.
Monday’s meeting included senior finance ministry officials and top executives of banks including State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank. “Today’s meeting is the first of a series of meetings that the finance ministry is convening to discuss current economic issues with key stakeholders, including some of the industry sectors whose growth has been affected in recent months,” the finance ministry said in a statement after the meeting.
Speaking at a press conference after the banking sector review meeting, finance secretary Rajiv Kumar said the minister will hold similar meetings with representatives of other sectors: MSMEs on Tuesday, automobile on Wednesday, financial markets on Friday, and real estate and homebuyers on Sunday.
Sitharaman also said the finance ministry will hold discussions with representatives of foreign portfolio investors (FPIs) and discuss their concerns on the budget decision to impose a surcharge on the super-rich.
“I am quite open to hear them out what they have to say,” she said, adding that the meeting will be held by economic affairs secretary Atanu Chakraborty soon. “The budget, presented on July 5, raised surcharge from 15% to 25% on taxable income between Rs 2 crore and Rs 5 crore, and from 15% to 37% for income above Rs 5 crore. Although, it was not intended for FPIs, it applies to those FPIs that operate as trusts or as association of persons. FPIs operating as corporates do not attract the surcharge,” she said.
She clarified that the government has not taken any decision about how much or when it plans to issue the proposed sovereign bonds. Since the announcement, nothing more has been done in this regard due to the ministry’s preoccupations with key legislations including amendments to the IBC, she added.