Business

Debt recast may neither help ailing MSMEs nor lenders, says industry body

The RBI logo.

The RBI logo.   | Photo Credit: REUTERS

The RBI’s move to allow restructuring of advances for ‘viable’ MSMEs may fail to achieve the intended objective of supporting viable but ailing MSMEs while avoiding an increase in NPAs at banks as the very meaning of ‘viable’ has undergone a change in the last four months due to the impact of COVID-19, an umbrella body comprising 30 industry groups said on Friday.

Observing that many MSMEs had struggled even before March in the wake of the economic slowdown, K.E. Raghunathan, convenor Consortium of Indian Associations (CIA) said the cut-off date should ideally be December 31, 2019. “Otherwise, restructuring will not actually reduce NPA growth at all. It will make healthier enterprises become weak.”

The CIA has made several suggestions including allowing borrowers to settle their loans without any pre-payment charges or interest. This would help both banks and entrepreneurs, he said.

Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Sep 18, 2020 6:07:55 PM | https://www.thehindu.com/business/debt-recast-may-neither-help-ailing-msmes-nor-lenders/article32298699.ece

Next Story