Updated: June 29, 2021 8:23:19 am
There has been a 71 per cent jump in the number of loan accounts that have turned Non-Performing Assets (NPA) under the Pradhan Mantri MUDRA Yojana (PMMY) in Gujarat in the past one year.
Bankers cite “poor repayment ability” due to factors influenced by Covid as the reason for rising bad debts under this flagship scheme of the Government of India launched for providing loans up to Rs 10 lakh to micro and small enterprises.
The latest report from State Level Bankers’ Committee (SLBC) in Gujarat states that at the end of March 2021, a total of 96,415 accounts were marked as NPAs and the bad debts of banks across the state had risen to Rs 729.42 crore. These NPAs stood at 6.6 per cent of the total loans disbursed under PMMY, a scheme meant to promote entrepreneurship among youth.
In comparison, the NPAs in 56,342 accounts in Gujarat were worth Rs 530.34 crore at the end of March 2020. “The effect of lockdown and Covid restrictions will surely have a bearing on the banks and its lending process. During the last one year, borrowers have found it difficult to repay their loans. There has been a overall dip in business and it is there for everyone to see. This has caused the spike in NPAs. However, the NPAs under PMMY are currently manageable,” said an official of Bank of Baroda, which is the convenor of SLBC in Gujarat.
PMMY or Mudra loans are given as business loans to vendors, traders and shopkeepers to boost income generation and create employment. It is also given as working capital loan through Mudra cards and for equipment financing for micro units. They are extended as transport vehicle loans (only for commercial use) and loans for agri-allied non-farm income generating activities like pisciculture, bee-keeping and poultry farming.
If performance of individual banks under the PMMY is taken into account, then the NPAs of banks like Punjab National Bank (PNB) and State Bank of India (SBI) under PMMY stood at 22 per cent and 15 per cent, respectively, for the year 2020-21. Others such as Bank of Baroda and Baroda Gramin Bank also had 11 per cent and 17 per cent NPAs, respectively. In comparison, the NPAs of SBI was only 5.18 per cent in 2019-20, while that of PNB was 6.64 per cent.
Among the three categories of PMMY loans disbursed during 2020-21, close to eight per cent of Tarun loan (Rs 50,000-Rs 5 lakh) accounts turned into NPA during 2020-21. Similarly, six per cent of Shishu loan (upto Rs 50,000) accounts and 5.6 per cent of Tarun accounts (Rs 5-10 lakh), turned into bad debts.
The NPAs under PMMY has been steadily rising in Gujarat, since it was launched six years ago. For instance, the NPAs under the scheme that stood at Rs 384 crore at the end of December 2018, rose to Rs 516 crore by March 2019. Thereafter, it rose to Rs 530 crore by end of March 2020.
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