MSMEs welcome restructuring of loans

Industries in Coimbatore have welcomed the announcement by Reserve Bank of India on Thursday that lenders will restructure before the end of this financial year defaulted bank loans that are declared standard as on March 1, 2020.

Prabhu Dhamodharan, convener of Indian Texpreneurs Federation, said that 30 % to 40 % of companies in the textile sector are expected to benefit from the announcement.

This measure will lead to revival of the entire industry. While the restructuring announcement is restricted to units with aggregate exposure of Rs. 25 crore, it should be extended to all MSMEs, the association said.

R. Ramamurthy, president of Coimbatore District Small Industries Association, said the move will benefit MSMEs, especially those that are hit during the lockdown period.

It also shows that the government and the RBI are aware of the problems faced by the MSMEs. Industries are operating at just about 50 % capacity now and need more support.

The government should extend till the end of this financial year the moratorium for repayment of loans.

However, J. James, president of Tamil Nadu Association of Cottage and Tiny Enterprises, said the main demand of the MSMEs across the country is extension of moratorium.

The one-time restructuring of loans will only bring down the NPA level for banks.

It will not benefit the industries that are hit by the spread of COVID-19 spread and the lockdown, Mr. James said.

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