Prime Minister Narendra Modi on Friday, November 2, launched a '59-minute loan' scheme for small and medium industries. Most of the media, leaders and bhakts called it the Diwali gift for MSME (Micro, Small and Medium Enterprises).
But, within four days of the launch of the scheme, it has been revealed that this Diwali gift is not for the industries, but for a private company in Gujarat, which is charging MSMEs ₹1,000 for an application. Even though this company is collecting all the required data from MSMEs along with the loan application, it is giving only an in-principle approval for the loan.
Maheshwar Peri, who has been a publisher of Outlook Magazine and runs a firm named Career 360, shared a Facebook post of Kedar Anil Gadgil, who had sent his online application for the MSME loan. In that post, Gadgil had written that he had mentioned to the manager that the PM had announced that the loan application would be processed within 59 minutes. On hearing this, Gadgil wrote, the manager stated, smiling, that the government had only promised to issue an ‘in principle clearance’ letter in 59 minutes. He quipped that every bank manager will tell the client this in 2 minutes.
Gadgil explains that this meant that he could submit his file for processing and in about five weeks (1.5 months), the bank would let him know if he is eligible for a loan or not.
Maheshwar Peri, in another post, explains the whole strategy behind this. In order to take a loan, you first have to register on the website '59 minute loan'. After logging in, you have to upload all the required documents. These include your GST user ID and password. You are required to answer answer a few questions and then the website issues a letter to you, which states that your application has been approved. After this you receive a mail from ‘No-Reply@CapitaWorld.com’ which contains the letter of approval.
Interestingly, most of the process on the website is without any human interference, i.e. auto. To obtain the approval letter, you have to pay a ₹1,000 rupeee as processing fee and about ₹180 as tax.
It is not that you will get a loan after this. The real work will start after this. The bank will now call you, they will ask for the original copy of all the documents, then they will assess your application and then they will decide whether to give you loan or not.
When we tried to gather information about Capita World.com, we came across some disturbing facts:
• Capitworld.com was constituted on March 30, 2015
• The company is registered in Ahmedabad.
• The company did not initiate any work for two years after coming into existence i.e till March 31, 2017 and its total revenue was only ₹ 15,000
• The authorised signatories of this company are named as Jinand Shah and Vikas Shah.
• Vinod Modha, who is a director of the company, is also reportedly the strategic advisor of two of Anil Ambani’s companies, Nirma and Mudra.
• In March 2018, four new directors were appointed to the company and one of them was Akhil Handa. He was involved in Narendra Modi’s poll campaign in 2014.
The question to be raised is why should a private company be attached to a government scheme, and that too a company which has neither the money nor the experience. Yet the government has authorised this company to collect ₹1,180 per application. Not only this, if your loan is sanctioned then 0.35% of the approved loan will also have be given as processing fee.
This means that Capita world is charging processing fees of ₹1,180 and 0.35 % for just sending your application to the bank. And of course, the security of any MSME data obtained by this company is not yet known.
There are a few more questions which arise here:
• In what capacity is Capita world giving you the ‘in principle’ approval of the loan, and asking you to approach the bank?
• On what basis has the government chosen and authorised the Capita world for this scheme?
• What were the terms of the contract when this company was selected?