PNB seeks extension of loan moratorium for MSMEs from RBI
2 min read . Updated: 06 May 2020, 09:19 PM ISTPunjab National Bank also requests RBI to permit one-time restructuring of loans till March 31, 2021 on a case to case basis
State-owned Punjab National Bank has sought extension of moratorium on loans for small businesses from the Reserve Bank of India (RBI), managing director and chief executive officer of the lender Mallikarjuna Rao said on Wednesday.
“Have requested RBI to rethink on moratorium and extend it if required, so that MSMEs (micro, small and medium enterprises) have more scope to revive," Rao said in a video conference organized by PHD Chambers of Commerce. He also said that covid-19 related challenges are not temporary and will continue for the next few months, and urged the industry to also request the central bank and the government for measures to support businesses worst hit by the pandemic..
In March, the RBI had allowed banks, non-banking financial companies (including housing finance companies) and other financial institutions to allow a three-month moratorium on payment of installments on term loans that are due for payment between March 1 and May 31.
Rao however, cautioned the industry participants that even though borrowers may get relief on paying installments, the interest burden will remain. He further pointed out that the issue of interest burden can be sorted, by restructuring loans.
“Have also requested RBI to permit one-time restructuring (of loans) till March 31, 2021 (on a case to case basis)," Rao said, urging the industry to also request the central bank to do the same.
Earlier this year, the central bank had already extended one-time restructuring for MSME loans till December 31, 2020.
Micro small and medium entertainment (MSME) sector, which employs millions of people, have been worst hit by the nationwide lockdown that led to closure of businesses. The union government is likely to soon announce relief measures for the beleaguered sector.
Last week, the RBI Governor and top bankers reviewed the current economic situation and post-lockdown credit flows, including provision of working capital, with special focus on credit flows to MSMEs. The union finance ministry is soon expected to announce a stimulus package to support these small businesses.
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