Mumbai, (The Hindu): Under pressure from the boiling Maratha agitation, the State government has decided to stand guarantee to banks loans extended to entrepreneurs from the community.

The government is already giving interest subvention benefits to Maratha youths, organisations, and businessmen. But now with the decision to secure 85% of the credit extended to Maratha businesses, it will cost the government Rs.160 crore just in the first phase. The State will guarantee loans up to a limit of Rs.10 lakh, officials said.

Officials also said the decision to stand guarantee to loans was taken after the financial institutions the government had approached refused to come to the rescue.

Of the total 11,555 letters of interest issued under the interest subvention scheme, only 13 persons have been given loans of 13.3 crore. The group credit subvention has only been given to 19 applications while subvention to farm organisation has been provided to just 10 applicants. But these too, officials said, have not been processed at all.

Senior officials said of the total applications received, 3,500 did not have a collateral to offer to banks.

A late scrutiny proved many of these were even bogus individuals and organisations. “The banks have categorically told us they cannot extend a loan to such applications which are based on flimsy credentials. The financial institutions, too, are nervous about extending a guarantee. In such a scenario, the State is left with no choice but to stand guarantee to the loans,” an official said.