Loan re­cast to aid 7 L MSMES

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - Rishab Shreshta, —PTI

In­dia may fall short of its 2022 tar­get due to im­po­si­tion of var­i­ous taxes and levies on so­lar prod­ucts, the can­cel­la­tion of ten­ders

and tar­iff rene­go­ti­a­tions, re­search and con­sul­tancy firm Wood Macken­zie said Mum­bai: The Re­serve Banks re­struc­tur­ing pack­age for small busi­nesses an­nounced last month will help re­cast Rs 1 lakh crore of loans for 7 lakh el­i­gi­ble mi­cro, small and medium en­ter­prises, a top govern­ment of­fi­cial has said.

The es­ti­mate from the Depart­ment of Fi­nan­cial Ser­vices (DFS) sec­re­tary Ra­jiv Ku­mar is much higher than do­mes­tic rat­ing agency Icra’s as­sess­ment of Rs 10,000 crore. It comes even as some banks have seen a re­luc­tance among the tar­get MSMES to take ad­van­tage of the scheme.

He said 7 lakh MSME units need re­struc­tur­ing.

“They all can be re­struc­tured till March 2020 with­out down­grad­ing the as­set. Rs one lakh crore worth loans will get re­struc­tured,” Ku­mar said late Fri­day, speak­ing at a post-bud­get in­ter­ac­tive meet­ing with in­dus­try cap­tains.

He said the scheme will help free up ad­di­tional re­sources which will fuel de­mand and cre­ate fur­ther op­por­tu­ni­ties in the in­dus­try.

It can be noted that the scheme was termed as “re­gres­sive” by an­a­lysts, as the RBI had of­fi­cially dis­con­tin­ued the prac­tice of re­struc­tur­ing of ad­vances, which is among the fac­tors blamed for the high NPAS as banks in­dulged in “ever-green­ing”.

“Dur­ing the past few years, RBI has been do­ing away with var­i­ous schemes for as­set qual­ity for­bear­ance and hence this is re­gres­sive from a credit cul­ture point of view, given the past ex­pe­ri­ences of the bank­ing sec­tor with re­struc­tur­ing,” Icras group head Karthik Srini­vasan had said.

The scheme was an­nounced by RBI af­ter a rec­om­men­da­tion to con­sider the same by its cen­tral board at a cru­cial Novem­ber meet­ing held amid fric­tion be­tween the cen­tral bank and the govern­ment.

The govern­ment, which is to face elec­tions in the forth­com­ing sum­mer months, was press­ing for lee­ways like the MSME re­cast to drive the econ­omy, while the RBI was re­luc­tant to set any new prece­dents. The board meet was fol­lowed by Gover­nor Ur­jit Pa­tels res­ig­na­tion early De­cem­ber.

so­lar an­a­lyst at Wood Macken­zie

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