Restructuring of stressed standard assets of MSMEs borrowers with credit facilities upto 25 Crore

Restructuring of stressed standard assets of MSMEs borrowers with credit facilities upto 25 Crore
Tuesday, November 20, 2018
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Dear all,

Your association is forwarding herewith articles published in Times of India and Economic Times, Mumbai Edition on dated 20.11.2018 regarding scheme of restructuring of stressed standard assets of MSMEs borrowers with credit facilities upto 25 Crore. 

Times of India, Mumbai Edition 20-11-2018

  • Govt mostly gets its way, but RBI has a deal it can live with
  • More steps for MSMEs, weak banks likely at next meeting

The Urjit Patel- led RBI may ease the risk weights for lending to micro, small and medium enterprises (MSMEs), helping lenders pare interest rates on loans to small businesses, which have been reeling under the pressure of a credit crunch, apart from facing stress in the wake of payment delays from large companies.

On Monday, the central bank agreed to open a restructuring window for MSMEs, although it initially suggested that small businesses were more prone to loan defaults.

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The Economic Times, Mumbai Edition 20-11-2018

  • RBI board meeting concludes, board will work on lifting
  • Some state run banks out of PCA

The Reserve Bank of India board agreed to restructure small-scale loans and  set up a committee to discuss the controversial issue of transfer of surplus reserves to the government as the central bank and the finance ministry appeared to put aside some of their differences to resolve some key issues.

The RBI board, which met for a marathon 10 hours on Monday, also decided to consider relaxation of lending norms for banks under the Prompt Corrective Action regime, a key demand of the government. The RBI’s Board for Financial Supervision would study this issue. Banks would also get a breather in meeting the capital adequacy goals under the Basel norms, the central bank said in a statement on Monday.

“The outcome was very calibrated and responsible, balancing the need for enhancing credit flow with maintaining financial stability. Restructuring stressed assets of mid-sized and small SMEs is likely to provide them a buffer during a period when liquidity and cash flows have been squeezed. For the broader banking system, stretching the implementation of stringent Basel III plus norms will release high-cost capital, thereby reducing borrowing costs,” said Saugata Bhattacharya, chief economist, Axis Bank. “The mutual agreement to reconsider RBI’s capital framework signals a flexibility in releasing sufficient reserves for growth capital while ensuring financial bulwarks  for managing systemic risk.”

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This is for your kind information.

Thanking you,
With regards,

For Silvassa Industries & Manufacturers Association,

Narendra Trivedi,

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