Govt-RBI move to restructure corporate loans: Sitharaman

Tribune News Service

New Delhi, July 31

Days after Prime Minister Narendra Modi indicated dissatisfaction with the disparity between sanctions and actual disbursements of credit, Finance Minister Nirmala Sitharaman said the government was working with the RBI on the Industry’s need for the restructuring of loans.

Addressing the national executive committee meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI), Sitharaman said: “The focus is on restructuring. The Finance Ministry is actively engaged with RBI on this. In principle, the idea that there may be a restructuring required is well taken.”

Sitharaman claimed that “every step” being announced and taken was taken after exhaustive consultations with the stakeholders and within the government.

“We have taken these steps to ensure that the impact is felt on the ground,” she said.

Addressing the concerns raised by the FICCI members on the difficulties faced by the MSMEs in taking loans under the Emergency Credit Guarantee Scheme, Sitharaman said banks could not refuse credit to MSMEs covered under the emergency credit facility.

“If refused, such instances must be reported. I will look into it,” she assured industrialists, according to a Finance Ministry news release. In a meeting with bankers on July 29, Prime Minister Modi had asked them to introspect and take a relook at their practices to ensure stable credit growth.

“Banks should not treat all proposals with the same yardstick and need to distinguish and identify bankable proposals and to ensure that they get access to funding on their merit and don’t suffer in the name of past NPAs,” said Modi, according to a PMO news release.

On the FICCI suggestion for the creation of a Development Finance Institution — which the Government also favours — the Finance Minister said work in this direction was going on.

“What shape it will take, we will know shortly,” Finance Minister Nirmala Sitharaman said.

The Finance Ministry is working with the RBI on the demand of the hospitality sector for extension of the moratorium, or restructuring.

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

FICCI President Sangita Reddy appreciated the government’s proactive approach in dealing with the situation.

“While the green shoots of recovery are being seen, sustaining this improvement in the operational parameters of businesses will require continuous support from the government. The support is particularly needed in the realm of strengthening market demand and to boost demand,” she said.