The rejection rate of loan applications on a centralized portal created for providing loans under government schemes has been very high, after which the Finance Ministry had to intervene. Two people with knowledge of the matter said that the ministry has asked public sector banks to integrate the ‘Jan Samarth’ portal with their loan management system, speed up the loan disbursement process and remove the reasons for the 43.2 percent rejection rate in FY 2026.
On the ‘Jan Samarth’ portal, launched in 2022, people can check their eligibility, apply online and get instant digital approval for many government loan schemes. Ministries and departments use this portal to monitor the implementation of credit-linked schemes and their performance.
The Mint report quoted sources as saying that the Finance Ministry has identified the main reasons for the application not being successful, which include incomplete documents, wrong information and the decision not to proceed with the loan process even after getting in-principle approval. These instructions were given by the Department of Financial Services during the review of public sector banks and reflect the central government’s efforts to improve the conversion rate on the portal.
improve conversions
The Ministry has directed banks to regularly update their business rule engines so that incidents of customer drop-off after digital approval can be reduced. This also includes onboarding all registered branches on the portal, strengthening the customer help process through Business Correspondents (BCs), promoting the platform across bank branches, websites and mobile apps and training bank officials on the available schemes.
Quoting sources, the Mint report said that connecting Jansamarth with the lending management system of banks will improve operational efficiency, as it will enable end-to-end digital lending and reduce the time taken from application to final payment.
The second person further said that it is important to systematically analyze the main reasons for loan rejection to improve approval rates and customer experience. In FY 2026, approximately 13.1 million loan applications were approved through Jan Samarth, more than three times the 4 million approvals in FY 2025.
A senior bank official, on condition of anonymity, said that the main reasons for rejection of digitally approved loan applications include applicants not providing required documents, submitting wrong information or data and deciding not to take the loan despite applying. Officials believe that resolving these issues can significantly improve the portal’s conversion rate.
Expanded scope of platform
In February, the government expanded the scope of ‘JanSamarth’ to include ‘Credit Guarantee for Micro Enterprises’ (CGTMSE) and ‘Emergency Credit Line Guarantee Scheme’ (ECLGS) 5.0. Apart from this, a new MSME credit assessment model is also being added under DFS and the schemes of the state governments of Maharashtra, Rajasthan, Madhya Pradesh, Odisha, Tamil Nadu, Karnataka and Gujarat are also being included in it.
Currently, 46 government-backed credit-linked schemes are available on ‘Jan Samarth’. These include Pradhan Mantri Mudra Yojana (PMMY), PM Swanidhi, Prime Minister Employment Generation Program (PMEGP), Kisan Credit Card (KCC), Agriculture Infrastructure Fund (AIF), Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM), Startup Loan, Rooftop Solar Installation Financing, Fisheries Kisan Credit Card, Home Loan Scheme for EWS/LIG/MIG beneficiaries, Self-Employment for Rehabilitation of Manual Scavengers. Scheme (SRMS), Bunkar Mudra Yojana and the recently added ECLGS 5.0 and Micro Credit Card for MSMEs. Experts say that merely reducing the processing time will not reduce the rejection rate, unless the quality of loan applications also improves.
Application quality
Loknath Panda, chief operating officer of BLS E-Services Ltd, a technology-based digital service provider, said in a Mint report that it is important to reduce the time taken to process the loan, but it is equally important to improve the quality of the application. Many applications are rejected because the documents are incomplete or the information is incorrect, not because they are not eligible. This is where Business Correspondents (BCs) can make a big difference.
Panda further said that by guiding applicants on documentation, verifying information at source and spreading awareness about government schemes, Business Correspondents can improve application success rates, reduce rejections and help ‘JanSamarth’ reach more needy beneficiaries, especially in rural and semi-urban India.”
Dharanidhar Tripathi, Chief Executive of Business Correspondents Resource Council in New Delhi, said in a media report that if the ministry’s instructions are implemented properly, it will help in strengthening digital lending. He said that this is a good initiative to promote credit delivery and digital adoption of government schemes and priority sector lending.
Once integrated with the lending management system of banks, proposals can be processed much faster as the applicant’s information will be easily synced with the bank’s system. Tripathi also said that business correspondents should be fairly compensated for helping borrowers, especially in rural areas.
