Gujarat govt’s small loans scheme starts on wrong foot

The govt promised guarantee-free loans, but applicants were asked for two guarantors

INDIA-HEALTH-VIRUS Representational image: Women maintain social distancing outside a bank as they wait to collect their pension during a government-imposed nationwide lockdown as a preventive measure against the spread of the COVID-19 coronavirus in Bhopal on April 15, 2020. (Photo by Gagan Nayar / AFP)

The Vijay Rupani-led BJP government in Gujarat has been caught on the wrong foot over its announcement of giving loans up to Rs 1 lakh for around 10 lakh small traders in the state whose businesses have been affected during COVID-19 pandemic.

Earlier this month, Gujarat Chief Minister Rupani had announced that under the Aatma Nirbhar Gujarat Sahay Yojana, Rs 1 lakh would be given as a loan to small traders, shop owners and small-scale businessmen by cooperative banks and cooperative credit society banks of the state.

While he announced that the loans would be given merely on the basis of an application and with no other documents or guarantors required, on the ground things have turned out to be different.

The loan was to be of three years with a moratorium period of six months. The beneficiaries will pay only two per cent interest and the remaining six per cent will be borne by the state government.

However, a few days ago, when people lined up in different parts of the state in front of the cooperative banks and cooperative credit society banks, they had a shocker ready for them: They were told to get two guarantors.

In addition, the banks have yet to disburse the forms as these forms have not been printed.

The AICC spokesperson from Gujarat, Shaktisinh Gohil, on Saturday hit out at the Gujarat state government alleging that these are merely announcements as the banks can not give loans without making the beneficiary a shareholder.

He said that the cooperative banks are under the purview of the Reserve Bank of India and that as per the rules, loans can not be given to anyone who is not a shareholder.

Gohil pointed out that even the Gujarat BJP's website talks about two guarantors and 10 documents that are required.

Sources in the cooperative banking sector speaking to THE WEEK questioned the feasibility of the plan, as the cooperative banking sector does not have the amount to give as loans that have been committed by the chief minister.

One of the players in the cooperative banking sector said that they also fear that beneficiaries could turn out defaulters as they might not have the capacity to return the money. Sources said that during these two months, lakhs of people have borrowed money from private money lenders.