NEW DELHI :
The finance ministry has asked the Reserve Bank of India (RBI) to consider restructuring the loans of companies that have been strained by the disruption caused by the coronavirus pandemic, finance minister Nirmala Sitharaman said on Friday.
“The focus is on restructuring. The finance ministry is actively engaged with RBI on this. In principle, the idea that there may be a restructuring required is well taken," she said during an interaction with the Federation of Indian Chambers of Commerce and Industry (Ficci).
Under the initiative, banks may allow borrowers to modify the loan tenure, extending the time to repay the amount or may even reduce the rate of interest. Sitharaman said the government is aware of the requirements of the hospitality sector, among others, on extending the moratorium or restructuring of loans, as it has been badly hit by the pandemic.
RBI and the finance ministry have announced a series of measures to support businesses. But a sustained rise in coronavirus cases and partial lockdowns by several states have put businesses and lenders under pressure. Now, businesses expect a second round of stimulus from the government. RBI is also expected to take a call on extending the six-month moratorium. However, bankers, including HDFC chairman Deepak Parekh, have opposed any move to extend the moratorium.
Sitharaman said banks cannot refuse loans to small businesses under the emergency credit guarantee lending scheme. “Banks cannot refuse credit to MSMEs (micro, small and medium enterprises) covered under the emergency credit facility. If refused, such instances must be reported. I will look into it."
In a videoconference meeting on Wednesday with the lenders, PM Narendra Modi asked them to raise lending to priority sectors. “While it was noted that significant progress has been made in most schemes, banks need to be proactive and actively engage with intended beneficiaries to ensure credit support reaches them in a timely manner," said he Prime Minister’s Office.
Sitharaman said her ministry is also working on setting up a development finance institution (DFI) for infrastructure financing. “The work is on for the development finance institution. What shape it will take, we will know shortly."
The ministryis working on setting up the DFI—a government-backed institution—to fund borrowers who can’t access loans from commercial lenders—Mint reported on Thursday.