If you’re headed to a loan mela—quite like a typical fair under a ceremonial tent—thinking of an on-the-spot sanction and disbursement, you got it wrong. On day one of the mega rollout, more than three decades after a similar exercise, the promised pan-Indian loan melas turned out to be customer outreach events to showcase that banks were ready to lend and were in good health, rather than a window to get fast approvals there and then.
“It’s a public outreach campaign, aimed at reiterating that banks are not shying away from offering loans,’’ Vijay Walia, general manager at Kolkata-based Corporation Bank, said. Pointing out that there was a perception that banks were not approving loans, he stressed that the loan mela was aimed at negating that myth.
Although letters of loan sanctions were handed out to customers on the launch day of the mela spread across some 90 districts, most of these were already under process for some weeks at the branch level. Some others had secured in-principle approval from banks recently. Ahead of the mela, public sector banks called up customers who had applied for loans, telling them to collect their sanction letters at these camps.
Business Standard reporters visited several melas across cities to find that customers, who got approval letters from banks on Thursday at these well-synchronised events, had applied for loans earlier at their respective branches.
The format followed by banks cutting across districts was similar to each other. Consider this. A loan camp organised by Canara Bank in Delhi had a ceremony, where customers were called on the dais and their respective banks handed over the sanction letters to them while announcing the amount and the purpose of the loan.
One of them was Shailendra Kumar Mishra who got ~1.5 lakh in loan under the Pradhan Mantri Mudra Yojana, from Bank of Baroda after applying for the loan one month ago. “I got a call from a BoB executive this morning to collect the approval letter at this camp,” Mishra said.
Colour & music pep things up
If not under a tent, some fairs were organised in community halls or local clubs. The traditional dance of 'Dollu Kunitha' (one form of folk dance in Karnataka) welcomed the banking customers in Bengaluru as they entered Jnana Jyothi Auditorium in the Central College campus of the city. Besides colour and hope for cash, there was music too. On the request of a Central Bank of India branch manager, a customer sang Gulabi Ankhen — a famous Bollywood song composed by R D Burman.
In a bid to make the event a success, branch heads of PSBs were told to bring in five customers to such camps and hand over loans to them. The camps failed to draw new customers in large numbers. “The footfall of walk-in customers was low. There are two reasons to it: some of these camps are taking place in community halls and second, banks had less time to publicise the loan mela,” a zonal manager of a PSB said, requesting anonymity. He said that banks were given a final list of venues to hold these camps only on Monday. Bank officials said that while there wasn’t any aggressive mass advertising initiative, banks ensured that their customers receive mailers and SMS about the outreach drive. Limited fund for advertising and promotions was cited as a constraint.
Application process same
Meanwhile, the loan application process at the mela, has not been different from that at a bank branch. If an applicant comes with the necessary documents, an in-principle approval can be given within 59 minutes through the MSME 59 minutes web portal, pointed out State Bank of India Delhi’s chief general manager Vijay Ranjan.
“But before the final approval is given or the amount is finally disbursed, the bank, like all other participants, will follow its normal procedure and only then the final disbursal will be sanctioned,” he said.
“People think that they can approach us and walk away with a loan. But we deal with public money and have to safeguard depositors’ money as well. So we have to be cautious that the bank doesn’t fail and depositors’ money can be returned with applicable interest,” Walia of Corporation Bank said.
According to SBI’s Ranjan, the organising banks are incurring expenses of the camps. SBI, for instance, spent around ~3-4 lakh on each camp in Delhi. He added that banks want to send out a message to the public that they are geared up to meet their financial needs, especially during the festive season. The messaging is also about the well being of banks.
At the SBI-organised camp in Nehru Place, the biggest tech market of the capital city, NBFCs such as Saija Finance, Paisalo Digital and Aadhaar Housing Finance joined the party. At other venues, private banks including HDFC Bank and YES Bank chipped in with their resources.
For visitors, it was an opportunity to check out the best schemes and plans with the lenders. One such person was Subhash Ghosh, who was seeking a loan of around ~1 crore for expansion of his two-year-old food processing start-up. During the day, he visited all the stalls speaking to lenders. He plans to go back to his finance team for picking up the best bet.
But, 32-year-old Pramod Kumar had to leave the loan camp disappointed. He tried to explain his case for taking a business loan to various lenders, but in vain. “I have an apparel manufacturing business — operating both on online and offline platforms and I am trying to seek loans under various programmes of the government whether it is Startup India or Mudra. But banks have set stringent conditions to sanction loan to a firm like mine,” he said.