No stressed MSME loan to be declared NPA till March 2020: Nirmala Sitharaman

Stressed asset MSMEs heaved a sigh of relief when finance minister Nirmal Sitaraman, announced that no stressed asset MSMEs would be declared a Non-profitable Asset (NPA), till 31st March, 2020.

Finance minister claimed that this move would help to elate the economy. MSMEs employee about 117 million people and also contribute in almost 29% in country’s GDP hence this move might help in up lifting the Indian economy.

Finance Ministry have been stressing on providing solution to MSME stressed loans

In addition, the finance ministry asked state owned bank to provide complete report of number of loans settled for MSMEs between 1st July to 30th September.

Banks would help MSMEs in clearing debts and let them start fresh

State owned banks will conduct ‘loan melas’ in 200 districts and credit ‘shamiana meetings’ with NBFCs and retail borrowers in 400 districts in a month. Through this government would recognize NBFCs whom they could directly give credit to. State owned banks would help MSMEs to settle their loan through discussions. Finance minister stressed that banks will even infuse credit if required.

The shamiana or the open house meetings are scheduled to be conducted as follows:

1.Between October 3 to October 7, meetings would be held in 200 districts.

2.From October 11, another 200 districts meeting would be held.

Banks to go Easy on Loans

RBI had made it mandatory for banks to link their fresh retail loans to an external benchmark which would be effective from 1st of October, previously. Banks can link to REPO rate or other benchmarks available. This would help borrowers to avail the benefits of faster change in rate of loan interest done by RBI.

Finance ministry has asked PSBs to Review MUDRA Loans

NPA on MUDRA loans by state owned banks has reached Rs.17,250.73 crore as on March 2019. Therefore, banks have been asked to review MUDRA loan and take measures accordingly.

In 2018, Government also allowed promoters of stressed MSMEs who couldn’t repay loans under the insolvency and Bankruptcy code.

The budget of 2019-20 has allotted INR 350 crore under Interest Subvention scheme’s division which provides 2% interest subventions to all the GST registered MSMEs on incremental loans. Also, recently Oriental bank of Commerce has linked its accounts to GST and have found that it eases the process of providing financial assistance. Government is considering to implement this idea to other PSBs so that banks loans could be easily assisted.

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