The Hindu Business Line : SMB debt revamp: Chamber for I-T sops to lenders

THE PHD Chamber of Commerce and Industry has said that in order to encourage banks to be more flexible with small and medium enterprises, the amount written off in the books of accounts of banks and financial institutions due to restructuring of debt should be allowed as deductible expenditure under the Income Tax Act.

This comes in response to the suggestions invited by the Reserve Bank of India for the debt restructuring scheme for SMEs to be announced shortly.

In its representation , PHDCCI said that the restructured amount outstanding as loan may be considered as priority sector lending to give an incentive to banks and other lending institutions.

"Such a mechanism would convert a lose-lose situation into a win-win situation as the losses of creditors and other stakeholders would be minimised through an orderly and coordinated restructuring programme," the PHDCCI said.

This scheme will be especially beneficial for a number of viable units, which have fallen into a debt trap due to various internal and external factors.

Further, the scheme should be made applicable to all the banks and financial institutions involved in debt restructuring.

More Stories on : RBI & Other Central Banks | SSI | Income Tax

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