Of the total loans of Rs 1.4 lakh crore extended by banks up to January 25, 2021, HDFC Bank has disbursed Rs 23,504. This is nearly 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 businesses.
The ECLGS came in two phases. The first ECLGS-1 was for only small businesses and, in the second ECLGS-2 round, it was extended to large industries that were part of the 26 stressed sectors. HDFC Bank’s performance has enabled private sector banks outdo public sector banks (PSBs) in funding for the micro, small and medium enterprises (MSME) sector.
In response to a query in Lok Sabha, minister of state for finance Anurag Thakur said that the total amount of loans sanctioned and disbursed by the banking sector was just a shade under Rs 2 lakh crore and Rs 1.4 lakh crore, respectively. Of this, the sanctions and disbursements by public sector banks were Rs 83,162 crore and Rs 61,226 crore. In the case of private banks, the sanction and disbursement numbers were Rs 1.15 lakh crore and Rs 80,227 crore.
In the public sector, after State Bank of India (SBI) the second-highest disbursements are by Punjab National Bank (PNB). In the private sector, ICICI Bank with Rs 12,982 crore is the second-largest lender, followed by Axis Bank with Rs 8,099 crore.
PSBs have traditionally been the dominant lenders to the MSME sector. But the typical trend for last few years is that private banks and non-banking finance companies (NBFCs) have strongly competed with PSBs in gaining a larger share of the MSME sector.
However, that trend changed after the nationwide lockdown. As of June 20, NBFCs had a share of 9.7% of MSME lending — down from 13% in March, followed by private banks with 38.7% share in loans and PSBs with 51.6% marketshare, according TransUnion Cibil. The state-run lenders still account for over 60% of the banking business in the country.
SBI, in an investor call on February 4, had said that the bank had sanctioned Rs 26,000 crore (cumulative) under the ECLGS. Of this, Rs 23,000 crore has been disbursed cumulatively. The bank also said that only Rs 488 crore was disbursed under ECLGS-2 and the rest was in ECLGS-1.
In the call, the bank’s chairman Dinesh Khara said that although the window for restructuring for medium and small business enterprises is available up to March 31, the additions would not be substantial. He said that the ECLGS disbursements were lower in the latest quarter because the bank had picked up SME growth in segments other than the ECLGS scheme.