MSMEs applaud RBI's Monetary Policy announcements
Updated: Mar 27, 2020 01:25:21pm
MSMEs applaud RBI's Monetary Policy announcements
New Delhi, Mar 27 (KNN) India's Central Bank- Reserve Bank of India (RBI), has joined in the Government to limit the damage wreaked by the COVID-19.
Governor RBI Shaktikanta Das announced a slew of measures while presenting seventh Bi-monthly Monetary Policy Statement, 2019-20, March 27, 2020 including for Micro and Small & Medium Enterprises (MSMEs).
Reacting to RBI's announcement '3-month moratorium on payment of instalments of all term loan EMIs outstanding on March 31', Federation of Indian Micro and Small & Medium Enterprises (FISME) Secretary General Anil Bhardwaj said that it was a perfectly timed move.
In a letter addressed to Prime Minister last week articulating demands of MSMEs, FISME had sought several flexibilities and concessions to deal with emerging COVID-19 led crisis.
RBI has responded positively on most of these demands.
FISME had asked that in no case MSMEs be declared NPAs and that Cash Credit limits of MSMEs be increased by at least 20% with easing of margin requirements substantially.
RBI has lend the flexibility to banks by giving 'exemption on incremental credit disbursed by banks between January 31 - July 31, 2020 on retail loans for automobiles, residential housing and loans to micro, small and medium enterprises (MSMEs) from the maintenance of cash reserve ratio (CRR)'.
FISME, however, is not sure that RBI's injection of big dose of liquidity will help increase MSMEs' access to funds.
'The main problem of MSMEs' not getting funds is not lack of liquidity but fear among bankers about witch-hunting after many of the loans turn bad' says Bhardwaj.