The State Level Bankers Committee has suggested several measures to the state government to improve the economic condition of the state. It has given specific suggestions to boost activities for the MSME, retail sector and agriculture considering COVID-19 breakdown.
The suggestions emanated after deliberations held with top officials of Reserve Bank of India, NABARD, state heads of major banks and representatives of Confederation of Indian Industry recently.
The apex banking body has suggested adding 20% to the credit limit on ad hoc basis to all borrowers engaged in manufacturing and retail business. For large borrowers engaged in manufacturing business, a sub-committee of bankers and industry representatives may be formed for each cluster, industry or industrial area which can give their recommendations after the detailed study of problems faced by that particular cluster, industry or industrial area, suggested the committee.
Installment and interest that has fallen due as on 01st March 2020 should be put under forbearance, without affecting CIBIL. All GST and other tax refund should be credited immediately. There are large numbers of units which were already in SMA 1 and 2 (Special Mention Accounts) categories due to existing slowdown of the economy. These units were somehow managing their operations but have been adversely affected due to present crisis, and need immediate relief. Any further deterioration in their cash flow will only exaggerate the present financial crisis and our efforts to save economy will fail.
Regulatory package announced by RBI for the moratorium of 3 installment/ interest for the month of March, April and May was applicable only to standard accounts and hence many accounts which were already facing problem due to slow down in economy and which were under SMA 1 & SMA 2 category could not be benefitted by the relief measures given by RBI. This has resulted in huge delinquencies during last month. Therefore RBI should extend the moratorium as above to all accounts which were standard as on 01.03.2020.
Government should waive the stamp duty on all emergency loans extended by banks to customers. Date to deposit advance tax should be extended for 6 months. Extend restructuring to MSME accounts should be accepted. The committee has also recommended deferring utility bills payment by industry and trade. New ventures/business should be promoted through collateral free loans.
IRAC norms and BASEL guidelines should be put under moratorium for 6 months. Banks should do away with the rating based interest rate to manufacturing units till 30 September 2020 and charge at MCLR.