Economy: a ground situation not promising
The ASSOCHAM has called for the rescheduling of bank loans across the board without making it rigid and conditional, urging the Reserve Bank of India (RBI) to eschew any rigid restructuring exercise.
“There is a pressing need for a liberal, across the board debt rescheduling. While Finance Minister Nirmala Sitharaman’s comments that her ministry is engaged with the RBI on the debt restructuring must be complimented, the central bank should eschew any rigid restructuring exercise,” ASSOCHAM Secretary General Deepak Sood said on 4 August 2020.
“The benefits of the loan restructuring should reach all sectors of the economy, as the Covid-19 has spared none and the damage is widely evident.”
Sood highlighted suggestions in some quarters that the debt restructuring should be done under a tight regulation would leave out a large segment of the economy, battling the Covid-19 impact – be it trade, hotels, restaurants, SMEs, or even large entities.
The restructuring would come as much-needed relief to both the borrowers and lenders while the rigid definitions and classifications of bank assets would lead to catapult in the non-performing assets, Sood pointed out.
The ASSOCHAM’s recent dipstick study had shown that there were very few takers of the credit. The study based on the RBI figures had pointed out how the credit de-growth had taken place by as much as 25% and above in certain segments while the contraction had taken place all across in the first few months of the current financial year, under the pandemic effect.
“Even as the government has announced unlocking of the economy, the ground situation is not all that promising despite an uptick in the GST collections,” Sood noted.
Debt restructuring would at least give a breathing space to the businesses to manage their working capital and cash flows, he added. #banks #finance #corporations #debts #loans #credit #RBI #ASSOCHAM /fiinews.com
