Finance Minister announced that banks won’t declare any new NPA for MSME loans till March 2020.
To boost liquidity in the economy, Finance Minister Nirmala Sitharaman today said public sector banks will organise credit “Shamiana meetings” in 400 districts beginning October 3 to provide loans to NBFCs and retail borrowers, including homebuyers and farmers.”PSBs will focus on giving loans to the ‘RAM’ category — retail, agriculture and MSMEs,” Sitharaman said at a press conference after meeting PSU bank heads. She said the idea is to ensure maximum credit disbursal during the festive season.Grappling with six-year low GDP growth and a 45-year high unemployment rate, the government is looking to boost credit that will bring liquidity for businesses and create jobs.
The open house public meetings will be held in two tranches. The first will be held between October 3 and 7 in 200 districts, while the remaining 200 will be covered October 11 onwards. For every existing customer, banks will have to bring in five new customers, the minister said. She also announced that banks won’t declare any stressed loan account of MSMEs as NPA till March 2020 and work on recasting their debt.
“There already exists a circular from the Reserve Bank that provides for stressed loan accounts of MSMEs not being declared non-performing assets (NPAs),” she said.
She also said that several MSMEs want one-time settlement of their outstanding dues, which should be settled expeditiously by the banks. “Government wants banks to recast MSME loans instead of declaring it a NPA,” she added.
This comes a day before the all-powerful GST Council is to meet in Goa to consider demands of industries, ranging from biscuits to car makers, for a cut in tax rates to overcome slowing demand.
Today’s announcements were in series of a number of steps government is taking to revive the economic growth.Finance Minister Nirmala Sitharaman, who has since her maiden Budget on July 5 announced measures in three tranches for boosting the economy, held a meeting with heads of public sector banks (PSBs) on Thursday to review liquidity or money flow in the system and transmission of lower benchmark interest rates to borrowers.
