Spe­cial MSME pack­age can help 7 cr ac­counts, `1 L cr loans: Fin secy

Millennium Post - - Mp Business -

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.

The scheme an­nounced by RBI is a one-time scheme wherein a loan tenor and in­ter­est rate can be re­vised with­out clas­si­fy­ing the as­set as a NPA. The fa­cil­ity is avail­able for stan­dard ad­vances of up to Rs 25 crore only.

Bankers said MSMES have a re­luc­tance to come for­ward and take ad­van­tage of such a scheme.

A pri­vate sec­tor banker said even though the as­set con­tin­ues to be stan­dard, the bor­row­ers credit his­tory is im­pacted which may cause some dif­fi­culty at a later stage.

The banker fur­ther said in the past as well, es­pe­cially in the pe­riod post de­mon­eti­sa­tion or calami­ties like the floods in Ker­ala, MSMES en­ti­tled for the help have shown a gen­eral re­luc­tance to come for­ward.

An­other banker said the scheme does not change things ma­te­ri­ally for an en­ter­prise be­yond ac­knowl­edg­ing the pains an MSME has had to go through be­cause of de­ci­sions like de­mon­eti­sa­tion or in­tro­duc­tion of GST.

"This is not go­ing to change the cash flows for a small en­ter­prise which have been im­pacted or the gen­eral de­mand sit­u­a­tion amid a slug­gish eco­nomic growth," he said.

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