While executives in the branch described it as routine communication, several bankers point to it to argue that their worst fears are coming true at a time when several state government officers are pushing for rapid disbursement of loans.
Although banks have been reluctant to push the Rs 10,000-loan to street vendors, the finance ministry, which controls the fate of state-run bank chiefs, has got them to dole out loans. Not surprisingly, public sector players have disbursed 92% of the loans so far with private banks being less obliging.
For instance, HDFC Bank, the largest player, received 18,200 applications but has sanctioned just 6,100 loans under the scheme. The sanctioned amount is less than Rs 6 crore and disbursements are a meagre Rs 1.2 crore. Similarly, ICICI Bank received 10,400 applications but sanctioned just 882 cases worth Rs 88 lakh and disbursed Rs 58 lakh. Axis Bank has disbursed loans to 392 street vendors from the 9,000-odd proposals, indicating that the private lenders are undertaking a thorough scrutiny.
Private sector bank executives fear that pressure from government officers may leave them with little choice. Given the small ticket size, banks in any case find it tough to operate the scheme.
Under the scheme — seen as the Centre’s payback to a section hit hard by the lockdown — those who repay on time are entitled to an annual interest subsidy of 7%. Official data shows that no subsidy has been given out so far, but is expected to flow in due course. Like the Mudra scheme, the government shares data only on applications and disbursals, repayment and default figures remain out of public gaze.