Bikky Khosla | 04 Aug, 2020
Minister Narendra Modi last week met stakeholders of banks and
NBFCs and discussed issues relating to the economy, including those in the
financial sector, particularly credit growth and risk aversion. He emphasised
that the Government is firmly behind the banking system. The comment came on
the heels of the release of the Financial Stability Report by
the RBI, which raised concern over heightened risk aversion by both public and
private sector banks, pulling the overall credit growth rate in March.
In his interaction, the PM not only
reviewed the progress
of schemes like emergency credit line for MSME, additional KCC cards, liquidity
window for NBFC and MFI, but he also emphasised on some practical aspects at
the grassroots level, such as not treating all proposals with the same
yardstick, need to distinguish and identify bankable proposals, and to
ensure that MSMEs don't suffer in the name of past NPAs. It is worth mentioning
here that while the ECLGS is a welcome scheme, at ground level MSMEs are facing
some troubles, and banks should not turn a blind eye to these issues.
to reports, banks, in the meeting, demanded more recap fund, and later reacting
to the development, the Finance Minister added that the proposal of one time
loan restructuring of loans is under consideration, and discussions are going
on with the RBI. She also noted the requirement of extension
of the moratorium or a restructuring for the hospitality sector. Of
late, several industry bodies have sought a one-time
restructuring of loans in the wake of the COVID-19 pandemic. It would be
interesting to see how the government responds in this regard.
the Finance Minister also admitted that it would be difficult to get a complete
picture of the economy at this point of time. According to several rating
agencies, the Indian economy may contract sharply in the coming quarters. Also, latest figures show that fiscal
deficit for the April-June 2020-21 period stood at 83.2 percent of the budget
estimates. These data
sets are no encouraging, but the minister rightly said that we have a
few months left when things
may change to positive.
I invite your opinions.