The Reserve Bank of India (RBI) is likely to take steps to revive export-oriented small and medium enterprises (SMEs) which face a host of problems owing to contraction in demand.
However, the central bank doesn’t seem to be in favour of going beyond the existing regulatory norms.
Some of the SME sectors’ demands like revision in margin norms, availability of additional funds and restructuring of loans may be accepted by the regulator.
The Reserve Bank of India (RBI) is likely to take steps to revive export-oriented small and medium enterprises (SMEs) which face a host of problems owing to contraction in demand.
However, the central bank doesn’t seem to be in favour of going beyond the existing regulatory norms.
Some of the SME sectors’ demands like revision in margin norms, availability of additional funds and restructuring of loans may be accepted by the regulator.
However, some other demands like increasing the NPA norms duration from the existing 90 days to 180 days and the provision for interest rate subvention of loans on the lines of the ones given to the agricultural sector may not be possible.
According to bankers who were present at an interaction with RBI governor D Subbarao, the RBI may consider some demands of the SMEs but some may not be acceptable.
In other words, too much diluting of the regulatory norms may not be possible, said the bankers.
Three deputy governors of the central bank, out of four, were present on the occasion. The export-oriented SMEs including leather, garments, textiles, heavy machinery have already apprised their problems and expectations from the banks during their meeting in Mumbai a couple of days ago.
The CMD of a major public sector bank, who was part of the delegation that met the RBI governor, told FE on condition of anonymity that the governor wanted to have a field-level perception of the SME finance. “We informed the RBI governor of the issues being faced by the sector and what can be done at our level. As on September 30, the banks’ overall exposure to the SME sector was to the tune of Rs 1,50,000 crore. On the liquidity front, we told him that it was quite comfortable,” said the banker. Also, the bankers told the governor that there should not be any crisis on the liquidity front in the short-term.
*source-The Financial Express
