Govt asks banks not to declare MSME stressed loan as NPA till March 2020

New Delhi, Sep 20 (KNN) The government has asked banks not to declare any stressed loan account of MSMEs as Non Performing Assets (NPA) till March 2020.

‘’There already exists a circular from the Reserve Bank that provides for stressed loan accounts of MSMEs not being declared non-performing assets (NPAs),’’ Finance Minister reminded at a press conference on Thursday after meeting PSU bank heads.

Following which she said that banks have been asked to follow that circular and not declare any stressed MSME loan as NPA till March 2020 and look at recasting their debt.

This would help the MSME sector, she said.

Also, banks have identified some NBFCs that they can lend to so that liquidity and credit is made available to those seeking money, she said.

The Reserve Bank of India (RBI) had earlier this month made it mandatory for banks to link all their fresh retail loans to an external benchmark effective October 1 and the central bank's repo rate being one such benchmark. Following the move, banks such as Punjab National Bank and Allahabad Bank announced linking their retail loans with the RBI's repo rate.

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