Emergency loan scheme: HDFC Bank beats SBI in Covid scheme loans

(This story initially appeared in on Feb 10, 2021)

HDFC Bank has outdone (SBI) in disbursements beneath the Emergency Credit Line Guarantee Scheme (ECLGS) launched by the federal government as part of the Covid relief package. The scheme concerned a authorities assure for added loans, as much as Rs 3 lakh crore, prolonged to companies dealing with stress as a result of Covid pandemic.

Of the full loans of Rs 1.4 lakh crore prolonged by banks as much as January 25, 2021, HDFC Bank has disbursed Rs 23,504. This is sort of 17% of the loans sanctioned. SBI, with disbursals of Rs 18,700, has a market share of 13.3%. According to banking analysts, this demonstrates HDFC Bank’s capabilities in lending to small companies.

The ECLGS got here in two phases. The first ECLGS-1 was for under small companies and, in the second ECLGS-2 spherical, it was prolonged to massive industries that have been a part of the 26 careworn sectors. HDFC Bank’s efficiency has enabled non-public sector banks outdo public sector banks (PSBs) in funding for the micro, small and medium enterprises (MSME) sector.


In response to a question in Lok Sabha, minister of state for finance Anurag Thakur mentioned that the full quantity of loans sanctioned and disbursed by the banking sector was only a shade beneath Rs 2 lakh crore and Rs 1.4 lakh crore, respectively. Of this, the sanctions and disbursements by public sector banks have been Rs 83,162 crore and Rs 61,226 crore. In the case of personal banks, the sanction and disbursement numbers have been Rs 1.15 lakh crore and Rs 80,227 crore.

In the general public sector, after State Bank of India (SBI) the second-highest disbursements are by

(PNB). In the non-public sector, ICICI Bank with Rs 12,982 crore is the second-largest lender, adopted by Axis Bank with Rs 8,099 crore.

PSBs have historically been the dominant lenders to the MSME sector. But the everyday development for previous couple of years is that non-public banks and non-banking finance companies (NBFCs) have strongly competed with PSBs in gaining a bigger share of the MSME sector.

However, that development modified after the nationwide lockdown. As of June 20, NBFCs had a share of 9.7% of MSME lending — down from 13% in March, adopted by non-public banks with 38.7% share in loans and PSBs with 51.6% marketshare, in accordance TransUnion Cibil. The state-run lenders nonetheless account for over 60% of the banking enterprise in the nation.

SBI, in an investor name on February 4, had mentioned that the financial institution had sanctioned Rs 26,000 crore (cumulative) beneath the ECLGS. Of this, Rs 23,000 crore has been disbursed cumulatively. The financial institution additionally mentioned that solely Rs 488 crore was disbursed beneath ECLGS-2 and the remainder was in ECLGS-1.

In the decision, the financial institution’s chairman Dinesh Khara mentioned that though the window for restructuring for medium and small enterprise enterprises is out there as much as March 31, the additions wouldn’t be substantial. He mentioned that the ECLGS disbursements have been decrease in the newest quarter as a result of the financial institution had picked up SME progress in segments aside from the ECLGS scheme.

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