State-owned banks have sanctioned about Rs 6.45 trillion worth loans to various sectors including Micro Small and Medium Enterprises (MSME), agriculture and retail between March 1 and May 15 when businesses were reeling under the impact of the Covid-19 crisis.
Loans sanctioned at the end of May 8 stood at Rs 5.95 trillion.
"Loans worth over Rs 6.45 trillion were sanctioned by PSBs during March 1 May 15 for 54.96 lakh accounts from MSME, Retail, Agriculture & Corporate sectors; A notable increase compared to the Rs 5.95 trillion sanctioned as of May 8," Finance Minister Nirmala Sitharaman said in a tweet.
"Public Sector Banks sanctioned over Rs 1.03 trillion as emergency credit lines & working capital enhancements in the period March 20 to May 15, which is a substantial increase over the Rs 65,879 crore that had been sanctioned up to May 8," she said.
Under the scheme, the banks provide an additional line of credit of 10 per cent of the existing fund based on working capital limits, subject to a maximum of Rs 200 crore.
RBI had allowed a three-month moratorium on repayment of all term loans due between March 1, 2020 and May 31, 2020.
Besides, banks have offered a 3-month moratorium on loan repayment till May 31 as per the RBI guidelines. With the government extending the nationwide lockdown up to May 31, the Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three more months, according to experts.
It is high time that businesses are given at least one-quarter of business operations before asking them to start addressing the loan obligations, said Indiforward's Executive Director Abhishek Chauhan.
An additional three-month moratorium by RBI is absolutely necessary both in the interest of businesses and the financial sector, he added.
In March, RBI had allowed a three-month moratorium on repayment of all term loans due between March 1, 2020 and May 31, 2020.
"With the lockdown now extended up to May 31, we expect RBI to extend the moratorium by three months more," SBI's research report Ecowrap said.