Finance Minister Sitharaman says banks provided information on MSME restructuring

Finance Minister Nirmala Sitharaman said on Wednesday that banks have informed the Finance Ministry regarding the number of Micro, Small and Medium Enterprises (MSME) that have been restructured, approached and provided loans to.

The Finance Minister has also directed the banks to clear out all the pending MSMEs by March 15. 

This comes as FM Sitharaman informed that the Government has asked the Reserve Bank of India (RBI) to extend the deadline for restructuring the debt scheme for MSME beyond March 31, 2020. 

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Restructuring of debt scheme comes as a relief to MSMEs

Earlier, Nirmala Sitharaman had said in her budget speech that over 5 lakh MSMEs have benefited from the restructuring of debt permitted by the RBI in the last year. The one-time restructuring exercise is expected to provide relief to MSMEs, helping them to improve their balance sheets and raise more capital considering the challenges faced by small businesses in securing affordable credit.

The exercise will also give relief to banks as at least 19 banks have restructured advances to MSMEs amounting to Rs 16,746.83 crore in 4.55 lakh accounts. 

To further address the working capital issue among MSMEs, FM Sitharaman had proposed a subordinate debt scheme for MSMEs wherein the debt will be provided by banks. This debt would be counted as quasi-equity and “would be fully guaranteed through the 27 Credit Guarantee Trust for Medium and Small Entrepreneurs,” the Finance Minister had said in her budget speech.

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