FinMin asks PSBs to ensure timely credit to businesses

With resumption of various business activities from Monday, the finance ministry has asked public sector banks to ensure timely credit to businesses that have been affected due to the COVID-19 related disruptions.

Last week, the Ministry of Home Affairs (MHA) had released a set of select business activities that will be allowed from Monday.

In a letter dated April 16, the Department of Financial Services (DFS) wrote to the chairman of State Bank of India and heads of other state-run banks that the timely origination, sanction and disbursement of fund and non-fund based credit is critical for revival of economic activity.

"Therefore, banks are advised to place in the public domain their time bound outreach and processing plans with clear-step timeframes and communicate clear responsibilities and timeframes to all levels for securing sourcing of loan requests and their appraisal, sanction, documentation and disbursement," the letter read.

The finance ministry has suggested an indicative timeframe to banks right from the processing to disbursement of funds under various credit support to businesses.

To provide working capital demand loans for existing MSME, corporate and agriculture borrowers, under the COVID-19 Emergency Credit Line, banks have been advised to keep a timeframe of three to six working days.

Similarly, the timeframe for providing financial assistance to self-help groups should also be within three to six working days, it said.

The letter said the reassessment of working capital up to Rs 5 crore for existing borrowers should be done within six to nine working days and the same for above Rs 5 crore should be completed within 12 to 15 working days.

"Banks are advised to draw a detailed activity-wise timeframe to achieve the turnaround time sought," the letter read.