Loan restructuring for India Inc on cards, says Finance Minister

Our Bureau New Delhi | Updated on July 31, 2020

All eyes on RBI Governor and the MPC meeting scheduled for next week

A stressed India Inc can look forward to some relief on the credit front as Finance Minister Niramla Sitharaman on Friday indicated work is in progress on loan structuring.

“The Finance Ministry is actively engaged with the RBI on this. In principle, the idea that there may be a restructuring required, is well taken,” Sitharaman said while addressing an industry chamber through video conferencing.

Couple of days ago India Inc urged the RBI Governor to consider loan restructuring. Though he did not give any assurance, he did mention that the point has been noted. Now all eyes are on next meeting of Monetary Policy Committee (MPC) followed by RBI’s announcement on various policy development. The meeting is expected to take place soon.

Hospitality sector woes

Sitharaman, in particular, acknowledged the problems of the hospitality sector in terms of credit needs.

“I fully understand the requirements of the hospitality sector on extension of the moratorium, or restructuring. We are working with the RBI on this,” she said.

The Finance Minister also assured businesses that there will not be any problem in availing loans under the government’s Emergency Credit Guarantee Scheme.

“Banks cannot refuse credit to MSMEs covered under emergency credit facility. If refused, such instances must be reported. I will look into it,” she said.

The scheme intends to provide collateral free credit at interest rate ranging 7.5 to 9.5 per cent. This scheme is available for MSMEs and businesses with annual turnover of ₹100 crore or less and outstanding loan up to ₹25 crore as on February 29. The maximum credit is fixed at ₹5 crore.

On the reform measures being announced by the government, she said: “Every step which is being announced and taken, is taken after exhaustive consultations with the stakeholders and within the government to make sure that no step is going to be a failure because we did not make necessary collateral changes. We have taken these steps to ensure that the impact is felt on the ground.”

Trade deals

She also highlighted the need for reciprocity in trade deals.

“Reciprocal arrangements are being asked with the countries with which we have opened up our markets. Reciprocity is a very critical point in our trade negotiations,” she said. Considering trade deficit, reciprocity or seeking equal benefit is key.

She also informed that decision on reducing GST rates on the healthcare and other products will be taken by the GST Council.

Published on July 31, 2020

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