Finance Minister Nirmala Sitharaman on Thursday urged banks to lend aggressively under various schemes to revive businesses reeling under the impact of Covid-19 pandemic. The minister asked banks to back borrowers when the three-month moratorium announced by the Reserve Bank of India to tide over the crisis triggered by the coronavirus outbreak.
The finance minister had a virtual review meeting with the heads of banks and non-banking finance companies to ensure speedy rollout of the debt restructuring plan for the resolution of Covid-related stress on loans.
The finance minister stressed the importance of credit availability for the revival of the economy. He asked the lenders to use the liquidity available with them to enhance credit growth. The lenders were apprehensive of the asset quality and low-demand situation prevailing since the outbreak of the coronavirus pandemic. Sitharaman sought feedback on the progress of various schemes, especially on the emergency credit line guarantee scheme extended to MSMEs.
The minister asked the bankers to give feedback of banks on the loan restructuring scheme announced by the Reserve Bank of India to help banks and borrowers tide over the current crisis. The meeting discussed sectors that could benefit from loan restructuring scheme and Sitharaman asked banks to give feedback on the scheme.
The minister said the crisis triggered by Covid-19 should not affect the lenders. Implementation of the resolution plan will help revive viable businesses. The Reserve Bank had allowed one-time restructuring of corporate and retail loans.
“The lenders assured that they are ready with their resolution policies, have started the process of identifying and reaching out to eligible borrowers,” a finance ministry statement said.
India’s country’s gross domestic product (GDP) shrank 23.9% in the first quarter of the current financial year, according to official growth numbers released earlier this week. The economy was in the grip of a slowdown when Covid-19 broke out. It was further ravaged by the impact of the pandemic and the stringent lockdown measures taken to contain its spread. The Narendra Modi government and the Reserve Bank of India have announced several measures to address the contraction in economy, the first in several decades.