home loan: Personal, home, car loans in just 59 minutes: India could be looking at a major gamechanger


To bring the consumption sector — the mainstay of India’s GDP — out of the doldrums, the government is looking at a major disruptive measure on the retail loan front.

Under this proposed mechanism, public sector banks could soon approve home loans, car loans and personal loans in 59 minutes — in the manner that India’s small and medium businesses (MSMEs) can avail loans via the
psbloansin59minutes.com portal, the Hindustan Times said in a report.

The new retail loan regime was deliberated upon at a meeting between public sector banks and Finance minister Nirmala Sitharaman, officials told HT requesting anonimity as the discussions have not yet reached an advanced stage.


The move is part of Modi government’s efforts to ease access to credit, officials say.

An economy in the doldrums

As the economy loses its mojo, consumers are buying less and less goods which in turn is pulling growth numbers even lower, leading to some sort of a vicious cycle. According to official data, the Indian economy has slowed down for the third consecutive quarter.

All big fast moving consumer goods (FMCG) companies in the country are reeling under the impact of a prolonged rural distress. Rise in sales of even the very basic of everyday items — such as hair oil, toothpaste or wheat flour — have fallen. Poor rural demand has also affected the sale of two-wheelers. The broader auto sector is already been mired in a serious downturn for a while.

The current slowdown could last longer than thought and will get more bitter before it eventually gets better, says Amitabh Chaudhry, CEO of Axis Bank.

“It’s obvious that the Indian economy is stalling. It started with the NBFC and real estate sector and has now impacted the auto sector and the consumption economy,” Chaudhry says.

The current slowdown has kept the economy on a crawl for almost a year now. One look at the latest numbers confirms it — June core sector growth fell to 0.2%, the lowest since May 2015. What is worse, poor demand has forced many business put a halt to production, albeit temporarily.

Gamechanger in the making?

The likely retail loan gamechanger is being seen as part of the measures aimed at boosting demand, which could bring the country’s sagging economic numbers back on track.

Prime Minister Narendra Modi had launched the Rs 1 cr-loan-in-59-minutes scheme for MSMEs in November 2 last year to enable businesses to apply for loans without physically visiting banks.

It’s been a significant hit with businesses; as per Finance ministry data, 1.3 million loans were sanctioned till July 17 this year. There is also a proposal to raise the loan amount from Rs 1 crore to Rs 5 crore.

A senior public sector banker told the newspaper: “It certainly helps borrowers as it makes the process easy for them, but banks will not give loans without proper verification and documentation. Extending the same for personal and housing loans may help revive demand in sectors such as automobiles.”

Loan disbursement in H1 2019: A sorry tale

Latest data from RBI revealed that in the first half of 2019, Indian banks have sanctioned retail loans at the slowest rate in five years. The fall in loan disbursement came amid rising worries over weak consumption demand and increasing unemployment hurting growth.

As per figures collated by ET, the last time a slower retail credit disbursement by banks in the first half of a year was between January and June 2014 — roughly around the time Modi first stormed to power — when a credit growth of 6.4% was witnessed.

The retail personal loan disbursement growth in H1 of 2019 (January-June) was 7.3%. The credit growth in the first half 2018 was 7.7% while for the same period in 2017 it was 8.6%. For the comparable periods of 2016 and 2016, the growth rate in loan disbursement was 8.1% and 8.5%, respectively.

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