Bikky Khosla | 11 Feb, 2020
In a major relief to small and medium
enterprises, the RBI last week decided
to extend the benefit of one-time loan restructuring without an asset
classification downgrade to standard accounts of GST registered MSMEs that were
in default as on January 1, 2020. The move came on the heels of Finance Minister
Nirmala Sitharaman, while presenting Union Budget 2020 on February
1, declaring that the government had asked the central bank to extend the scheme
by another year.
Without an iota of doubt, the move will provide a
much-needed relief to our MSMEs. In its monetary policy review, the RBI stated
that the sector plays an important role in the growth of the Indian economy,
contributing in a major way to exports, job creation and GDP. Considering this,
it has been decided to extend the benefit of one-time restructuring without an
asset classification downgrade to standard accounts of GST registered MSMEs
that were in default as on January 1, 2020.
In another major decision, the central bank has decided to
link pricing of loans by scheduled commercial banks for medium enterprises to
an external benchmark. Several measures have been declared also to boost
realty, housing and NBFC segments. Now, if banks give incremental housing, auto
and MSME loan then that amount will be deducted from cash reserve ratio. This
will result in banks having more money in hands. These credit-boosting measures
are need of the hour.
While the above measures are welcome, the
Centre should not miss the point that our MSMEs are grappling with the problem of delayed payments and slowdown in
demand, and there is an urgent need to take more measures to address the
working capital needs of the sector. At the same time it is also of utmost
importance that the health of the banking sector is not compromised while
ensuring adequate credit to these productive sectors.
I invite your opinions.