The government has directed public sector banks (PSBs) to resolve the pending debt restructuring cases of Micro, Small and Medium Enterprises (MSME) by March 15.
Nirmala Sitharaman, Finance Minister, along with Nitin Gadkari, Minister in-charge of MSMEs, reviewed the cases with the heads of PSBs on Wednesday. It was informed in the meeting that as on January 6, the number of identified cases for restructuring was 5.53 lakh, of which, 5.28 lakh have been resolved. For the remaining cases, the deadline of March 15 has been fixed. It has also been decided to resolve the issue related to 59-minutes loans.
The Budget had extended the deadline for one-time debt recast for the firms that are in default but have not been classified as non-performing. After this, the RBI said that 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.
The restructuring under the scheme has to be implemented latest by December 31. This will benefit the eligible MSME entities, which could not be restructured under the provisions of the circular dated January 1, 2019, and also the MSME entities that have become stressed thereafter. The original scheme was applicable for standard MSME accounts as of January 1, 2019, while the restructuring was to be implemented by March 31, 2020. The government hopes more and more MSMEs will take benefit of the scheme.
Branch connect
Prior to the review meeting, the FM unveiled third edition of EASE (Enhanced Access and Service Excellence) for PSBs. Addressing bankers, she exhorted them to have one-to-one interface with their customers through branch-based banking and not rely much on credit ratings agencies.
“We have (rating) agencies that rate banking functions and talk about customers and their worthiness. They are only an indicator of what the customer is. Good, judicious, mix of personal connect, assessment and data information is what is required,” she said.
She said that banks need to connect with their customers by leveraging technology, but not just through the interface of technology. “Technology will facilitate, but it would be nice if they (bankers) connect to customers,” she said while asking bankers to focus more at the grassroots level.
Under the third edition of the Ease 3.0 scheme, a detailed action plan has been proposed. These include ‘dial-a-loan’, which implies digitally-enabled doorstep facilitation for the initiation of retail and MSME loans. Customers will have the facility to register loan requests through digitally-enabled channels.