More relief for MSMEs on the cards

NEW DELHI:  Even as there is no formal announcement of rolling out a financial package immediately, the finance ministry is considering further relaxation of funding norms and credit for stressed small industries, according to officials. 

“We have received a host of requests from small industries, which includes a loan moratorium for six months. While the central bank has already announced some measures such as restructuring, more measures especially for those MSMEs which are hit hard during regional lockdown are very much on cards,” a senior finance ministry official said.

The official added that the measures under consideration are a special credit window for small firms, relaxation of certain criteria and expansion of the ambit of the existing credit guarantee scheme by including more sectors. Mirco, small and medium enterprises (MSMEs) have already requested specific measures like waivers on electricity bills, tax and GST relief, along with collateral-free credit lines. 

Last week, Reserve Bank Governor Shaktikanta Das had announced many measures to extend support to MSMEs and small businesses, including Resolution Framework 2.0 under which individuals and small businesses having exposure up to Rs 25 crore can opt for loan restructuring if they had not availed the earlier scheme. In case of those who had availed the loan restructuring under the earlier scheme, the RBI had permitted banks and lending institutions to modify the plans and increase the period of moratorium. 

It added that the restructuring under the proposed framework may be invoked up to September 30, 2021, and would have to be implemented within 90 days after invocation. These measures will provide short term relief, but with extension of localised lockdown beyond May small business owners are bound to face difficult times ahead. Even when the lockdown is not as strict as last year, the devastation in terms of human life may derail the nascent recovery which was visible in January and February of this year.