Govt working with RBI on industry’s demand for loan restructuring: FM

The government is working with Reserve Bank of India (RBI) on the industry’s need for the restructuring of loans in the wake of the corona virus (Covid-19) pandemic finance minister Nirmala Sitharaman said today.

She was addressing the National Executive Committee Meeting (NECM) of the Federation of Indian Chambers of Commerce and Industry (FICCI).

“The focus is on restructuring. Finance ministry is actively engaged with RBI on this. In principle, the idea that there may be a restructuring required, is well taken,” the finance minister said.

Elaborating on the extensive consultations on the reform measures that are being announced by the government,. Sitharaman said, “Every step which is being announced and taken, is taken after exhaustive consultations with the stakeholders and within the government so as 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.”

Addressing the concerns raised by the FICCI members on the difficulties faced by the MSMEs in taking loans under the Emergency Credit Guarantee Scheme announced by the government, Sitharaman said, “Banks cannot refuse credit to MSMEs covered under emergency credit facility. If refused, such instances must be reported. I will look into it.”

On the FICCI suggestion for creation of a Development Finance Institution to handle the emerging credit requirements of the industry, the finance minister said, “The work is going on the Development Finance Institution. What shape it will take, we will know shortly.”

On bilateral trade deals with countries, Sitaraman stressed the need for reciprocity. “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.

The finance minister also said that a decision on reducing GST rates on the healthcare and other products will be taken by the GST Council.

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

FICCI president Dr 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,” said Dr Reddy.