The Finance Ministry may consider to raise the Rs 1 crore cap under the 59-minute loan scheme to Rs 3-5 crore.

According to government officials, the cap will be raised in a gradual manner.

Last year, the government launched a 'Support and Outreach Initiative' for micro, small and medium enterprises.

As part of this programme, 12 key initiatives, including a 59-minute loan portal for MSMEs were launched.

This dedicated digital platform seeks to cut the lengthy and cumbersome loan approval process -- one of the biggest challenges facing our MSMEs.

The scheme has already drawn healthy response from the borrowers and some of the PSU banks associated with this portal are now keen on hiking the credit limit.

Extending hassle-free loans to such units which are without any collateral has been a hit on www.psbloansin59minutes.com, which is a strategic initiative of the SIBDI-led (Small Industries Development Bank of India) PSB consortium incubated under the aegis of the Department of Financial Services (DFS).

The portal has reduced the turnaround time for sanctioning loans from 20-25 days to 59 minutes. It is a strategic initiative of a consortium of five public sector banks (PSBs), led by the SIBDI.

The majority stake is held by the SIDBI and the five large PSBs, including the State Bank of India (SBI), Bank of Baroda, Punjab National Bank (PNB), Vijaya Bank and Indian Bank.

Some banks have suggested to raise the loan cap which can be looked at, said an official, adding that the limit might be gradually increased to Rs 2 crore. But the Ministry needs data on the credit off-take and the asset quality before arriving at any decision.

The outstanding credit to MSMEs grew to Rs 25.2 lakh crore at the end of 2018. At the same time, the consolidated non-performing assets (NPAs) in the sector increased to 9 per cent from 7.3 per cent, a CIBIL-SIDBI report recently said.

Banks have started to witness a jump in credit to micro and small businesses through the online platform psbloansin59minutes.com, which basically deals with small credit limit loans.

The government has been putting a lot of stress on loans to the micro units. In fact, another variant of such loans -- Mudra -- is also a key constituent of the Finance Ministry's financial inclusion programme, as these small entrepreneurial activities push employment and income in the lower income groups.

In November 2018, Modi announced a slew measures for the MSMEs with an aim to improve credit flow and generate employment opportunities.

The portal has been a hit with the borrowers for approving loans in less than an hour. The interest rate on such loans starts at 8 per cent.

Post approval, the amount is disbursed within 7-8 days. The borrowers are not required to provide any collateral as the portal is linked to the Credit Guarantee Fund Trust for Micro and Small Enterprises, which provides guarantees covering 85 per cent of up to Rs 5 lakh loans to micro enterprises.

The fund also gives guarantee for up to 50 per cent of the sanctioned amount -- ranging between Rs 10 lakh and Rs 1 crore -- for micro and small borrowers involved in retail trade activity.

Till December 25, 2018, public sector banks had sanctioned the applications of 40,669 borrowers amounting to nearly Rs 14,100 crore through psbloansin59minutes.com, according to a reply in the Lok Sabha by Minister of State for Finance Shiv Pratap Shukla on December 28.

Of the 112,043 applications worth over Rs 37,400 crore which were given in-principle approval, 38 per cent have been sanctioned.