FM Sitharaman Announces Relief For MSMEs, Says Banks To Organise 'Loan Melas' In 400 Districts

After meeting the heads of public sector banks, the Finance Minister said that banks have started moving in line with the measures announced off late for providing liquidity.

The minister also said that banks can recast loans to MSMEs instead of declaring them NPAs. (Image: Finance Ministry/ Twitter)

New Delhi: In what could be considered as a relief for Micro Small Medium Enterprises (MSMEs), Finance Minister Nirmala Sitharaman on Thursday the government is reviewing the condition of public sector banks (PSBs) and has asked them to lend more. The announcement by the FM comes at a time when consumer demand in several business sectors has slumped sharply. During a press conference held today, Sitharaman also announced that stressed MSMEs would not be declared non-performing assets (NPA) till March 31, 2020. The minister also said that banks can recast loans to MSMEs instead of declaring them NPAs. On the liquidity situation, Sitharaman said that the effort is to ensure that credit is provided wherever there is a need, but in a transparent manner. After meeting the heads of public sector banks, the Finance Minister said that banks have started moving in line with the measures announced off late for providing liquidity. She also announced that that there would be a gathering of non-banking financial companies (NBFC) and retail customers in 200 districts of the country, until September 29. Banks would be encouraged to include new retail customers for lending, she said adding that the intention is that liquidity should reach consumers before the festival season begins. Sitharaman also informed reporters that key details were discussed about increase liquidity in the market during the meeting with top bankers earlier in the day. In a tweet, Ministry of Finance stated that discussions were held on overall credit growth with focus on disbursements to key sectors to support the needs of economy.

Discussions held on overall credit growth with focus on disbursements to key sectors to support the needs of economy.

— Ministry of Finance (@FinMinIndia) September 19, 2019

"Finance Minister reviews banking initiatives announced earlier with focus on credit growth, rate cut transmission and amalgamation," read another tweet from Finance Ministry. During the press conference, Sitharaman also announced that banks will organise 'loan melas' in as many as 400 districts starting next week in order to provide credit to borrowers, including homebuyers and farmers. The open house public meetings will be held in two tranches. The first will be held between October 3 and 7 in 200 districts, while the remaining 200 will be covered October 11 onwards, FM informed adding that  MoS for Finance Anurag Thakur will look after this scheme.

FM Smt @nsitharaman & MoS Sh @ianuragthakur held a review meeting with Public Sector Banks at New Delhi today. A number of issues relating to the sector were discussed.

| @FinMinIndia | pic.twitter.com/CfZO0Xg13p — Office of Mr. Anurag Thakur (@Anurag_Office) September 19, 2019

"Banks, NBFCs who have now benefited from liquidity given to them, and retail customers who’d come and claim credit, will all be there. Scheduled banks will now show that they are indeed pushing liquidity to the NBFCs or directly to the customer," Sitharaman said. As the country is heading towards festive season starting next month, Sitharaman said there will be an effort to ensure maximum credit is disbursed during the festival season. Government data suggest that India is facing a severe economic slowdown. The gross domestic product (GDP) growth dropped down to 5 per cent in the quarter ended June which was the slowest speed of growth since March 2013 when it was 4.7 per cent.