The government will now take strict actions against banks if they refuse credit to MSMES under the Credit Guarantee Fund Scheme. According to The Economic Times, the Finance Minister of India, Nirmala Sitharaman said that banks cannot refuse credit to MSMEs under the emergency credit facility and any refusal should be reported.
The cited media agency reported that as of July 23, 2020, the total amount sanctioned under the 100 per cent ECLGS by public sector banks and private banks stands at INR 1,30,491.79 crore, of which INR 82,065.01 crore has already been disbursed.
"Banks cannot refuse credit to MSMEs covered under emergency credit facility. If refused, such instances must be reported. I will look into it," Sitharaman said at a closed-door event of industry chamber, FICCI, according to the cited media report.
Earlier on, the government had proclaimed INR 3 lakh crore Collateral-free loans for companies, especially MSMEs.
The Finance Minister also said the Ministry of Finance is working along with the RBI to extend loan moratorium or form a restructuring scheme for the Indian hospitality industry.
"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 as per the cited media report.
Sitharaman told that every move that has been announced and taken to deal with the current scenario is being done after extensive consultation with the stakeholders and industry veterans.
"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," a Ficci posted on Twitter quoted Sitharaman as saying.
In a bid to aid loan borrowers during the lockdown phase, the central bank had earlier proclaimed a three-month loan moratorium in March, which got further extended till August 31. Under the moratorium, loan borrowers can delay paying off interest and principal amount of the credit.