New Delhi, June 20 (KNN) In a bid to extend lending to genuine corporate borrowers and small businesses, bankers chalked out a two stage strategy to support them financially, Finance Minister Piyush Goyal said.

Goyal said, from past few years, it has become difficult for MSMEs and genuine good companies to access working capital loans from banks.

Thus in this regard, all the banks have collectively decided to embark on two stage strategy to cater the credit needs of genuine, deserving and well performing good companies, he added.

Detailing the strategy stage wise, Minister said that in the first stage, who have borrowing between Rs 200-2000 crore are about 4,500 such good accounts in the PSU banks and most of them in consortium lending. The PSU banks over the next 3-4 weeks going to do focus study of the credit needs of these good borrowers.

In the second stage, banks will take up accounts with borrowings up to Rs 200 crore, which will also cover a large section of MSMEs and look at the genuine credit needs of all these companies.

Since MSME sector contributes 40% to India’s exports and 45% in the manufacturing sector, thus banks have decided to work collectively as a team and support such MSMEs who have good signs of revival.

In this regard, bankers have decided that they will do a creditors' arrangement amongst the bankers so that earlier problems which was faced in consortium lending can be ironed out more smoothly, he added.

“Bankers have resolved that they will also follow a decision taken by 66 per cent of the lenders as followed in case of cases under Insolvency and Bankruptcy Code”, he said, adding that as a result roadblocks will not be created to faster growth of business and industry in system.

The minister said, various proposals in this regard will be formalized in the next two –three weeks.

In a meeting with Public sector banks, proposals on having an oversight committee, comprising of retired judges, vigilance officers, regulators and external experts, to help faster decision making in the banking system were also discussed.

Besides, lenders discussed on a process to ensure credit flow to good borrowers or good accounts, where some of the banks under Prompt Corrective Action framework of RBI are also the part of consortium, do not face any difficulty in meeting their working capital needs.

The RBI has put 11 banks, including Allahabad Bank, United Bank of India, Corporation Bank and IDBI Bank, among others, under PCA framework.

Committed to support each and every bank, the government, the owner of 21 PSBs is going to play an important role in the economic and social development of the country," the minister said.

Emphasizing that government is ready to play the role of facilitator, Goyal said adequate capital would be provided to them if they require.Banks have sufficient liquidity in the system and no bank would be allowed to default on payment of bond interest.

He also assured bankers that government will always stand with honest employees the honest employees and will not spare dishonest one.