State Bank of India (SBI) is closely monitoring micro, small and medium enterprise (MSME) loan accounts which opted for repayment moratorium, according to Dinesh Kumar Khara, Managing Director.

This close monitoring is aimed at assessing the possibility of these accounts slipping once the six-month moratorium ends on August 31, 2020.

As MSMEs are facing cash-flow issues, banks could also consider restructuring their accounts in due course based on the Reserve Bank of India’s (RBI) evaluation of the system-wide situation, said Khara at a seminar organised by industry body ASSOCHAM.

To mitigate the burden of debt servicing brought about by disruptions on account of the fall-out of the Covid-19 pandemic, the RBI has allowed a six-month moratorium, beginning March 1, 2020, on term loans, easing of working capital financing, and deferment of interest on working capital facilities.

Per its FY20 annual report, SBI extended moratorium/deferment in the case of borrowers with an aggregate exposure of ₹5,63,896.15 crore.

As at March-end 2020, SBI’s SME portfolio accounted for about 13 per cent of its domestic advances of ₹20,65,484 crore.

Khara observed that in the case of personal (segment) loans there was not much of a challenge vis-a-vis the moratorium.

The SBI MD said while huge liquidity is available with the banking system, credit off-take is very limited.

NBFCs in stress

Umesh Revankar, MD & CEO, Shriram Transport Finance Corporation, observed that funding for non-banking finance companies (NBFCs) has not been reaching the way it was envisaged by the regulator and the government.

Amid debt redemption pressure, the option to tap capital market is drying out, he added. Hence, banking funding was the only option for NBFCs.

As NBFCs have created a niche for themselves in lending to MSMEs, Revankar felt that banks should consider them as partners in meeting their priority sector lending targets.

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