CHENNAI: Finance minister Nirmala Sitharaman said long-time complaints of delayed payments by public sector undertakings to Micro, Small and Medium Enterprises (MSMEs) is being taken care of by submitting a list of companies with dues to the banks to enhance discounting on bills.

The finance minister on Saturday had conducted meeting with domain experts and industry representatives to clear doubts on Budget 2020 in Chennai.

Under the Reserve Bank of India's One-time Restructuring Scheme for MSME advances, banks and NBFCs are asked to permit a one-time restructuring of existing loans to MSMEs classified as 'standard' without a downgrade in the asset classification.

After proposing for a year's extension in restructuring bad loans of MSMEs in the budget, Sitharaman said, "We have already extended a list of companies, which have dues towards MSMEs, with the bankers, so that such companies can get discount on bills. Nearly 60% of all pending bills for MSMEs were cleared by PSUs after we gave a push to PSUs in September-November, 2019. We have also reached out to big private players to clear receivables pending towards MSMEs."

Long delays in settlement of dues by Government departments (PSUs) have been a major concern for both MSMEs and lenders (State-owned banks).

Earlier, State-owned Indian Bank MD and CEO Padmaja Chundru told TOI, "The Budget proposal to extend the deadline to restructure of MSME accounts (marked as bad loans) will not solve real problem delayed receivables. All these restructuring does not result in additional cash flow of MSMEs. 

They need cash, for which discounting their bills and putting cash in their hands will help. In the last one year, we have restructured about 30% of eligible accounts. We are even going through all accounts which likely to go through stress and are restructuring another 500-800 MSME accounts worth 300 crore. 

The (MSME) sector is not completely out of woods, and still have issues with outstanding of receivables. It is more important to address these issues form big corporates and PSUs, instead of going on restructuring."

The banking regulator, RBI had directed all banks and non-banking financial companies (NBFCs) on January 1, 2019, to restructure of loans to MSMEs, with a deadline till of March 31, 2020.

Published On : 09-02-2020

Source : Times of India