New Delhi, Dec 29: With a sizeable number of MSMEs struggling to repay debts, the industry has asked the government to launch an amnesty scheme for non-performing assets (NPAs) and a guarantee cover of 100% of additional security needed for restructuring of bank loans.
“We have suggested an amnesty scheme for NPAs upto Rs 25 crore. We are asking only about writing off penal interest and penalties. The government can come up with a one-time scheme that will benefit lakhs of firms. Assuming that even 2 lakh firms are enabled to resume operations by paying outstanding principal, at least 20 lakh people would get jobs,” Vinod Kumar, President, India SME Forum told UNI.
It is estimated that many loan accounts turned NPA even with extended NPA classification from 90 days to 180 days in the face of devastating pandemic. With the MSME sector being one of the worst-affected by the disruption, a large number of enterprises are still trying to come on their feet with the help of support measures by the government.
The government had come up with Rs 3 lakh crores collateral free automatic loans for MSMEs to support the sector. The overall guarantee under the Emergency Credit Line Guarantee Scheme (ECLGS) was later enhanced to Rs 4.5 lakh crore.
But given the weak financial position of the MSMEs the support appeared inadequate. As a result, the risk of NPA in the sector has been high.
In order to help the vulnerable enterprises, leading industry association Federation of Indian Micro and Small & Medium Enterprises (FISME) has suggested that a guarantee cover of 100% of additional security needed for loan restructuring may be extended through the existing Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.
In its Budget recommendations, FISME has also urged Finance Ministry to empower Branch Managers of the banks to take a decision on restructuring proposals by giving them flexibility to go beyond benchmark norms.
