Restructuring of loans to MSMEs hailed

Nagpur: Laghu Udyog Bharati (LUB), an RSS-affiliated organization working for micro, small and medium entrepreneurs, has said the Reserve Bank of India (RBI) initiative to allow restructuring of stressed loans to MSME units was a historic and timely decision that would bring big benefits not only to the sector but also the banking sector reeling under non-performing asset (NPA) crisis.
Speaking at an interactive session for members here, LUB national general secretary Govind Lele said for the first time in the history of RBI, such a targeted relief for MSMEs has been granted. “Since March 31, 2015, the RBI had stopped all loan restructuring citing NPA crisis. The problem was that MSMEs were clubbed with large manufacturing industries though they were distinctly disparate entities. MSMEs had been suffering liquidity crisis because of external factors, mainly due to large industries to which they supply to were under severe stress and had defaulted on payments.

LUB, which has 20,000 membership and presence in 450 districts spread across 24 states, had taken up with the RBI the need to address their problem separately and it conceded. “MSME account not exceeding Rs25 crore as on January 1, 2019, would have a one-time restructuring facility for loans that are in default, but standard,” said Sudhakar Atre, LUB banking and finance adviser.

Lele said new RBI governor Shaktikanta Das had, for the first time in RBI history, has given a one-on-one hearing to MSME representatives on January 7 and patiently heard all their grievances with an executive director and industrial secretary taking notes of issues raised at the meeting. MSME is the backbone of Indian economy providing employment to workers in industrial sector. Atre appealed to MSME borrowers to avail of the benefit that is to be implemented by March 2020. The RBI move will give the units more time to repay their stressed loans, he said.