MUMBAI: Reserve Bank of India (RBI) deputy governor Viral Acharya, speaking at IIT-Bombay’s annual Techfest on Saturday, stuck to the central bank’s stance on fundamental changes to the way loans are given and managed instead of a forbearance and repayment relaxation.
“At RBI, we are excited about how we can solve the credit problems at the grassroots for micro entrepreneurs in a fundamental way, rather than saying that when they default, we will just give them forbearance and give them another six or nine months to pay up,” PTI quoted Acharya as saying.The RBI had come under pressure to restructure or ease liquidity flows for the MSME industry. At its contentious board meeting in November, the RBI Board had advised it to consider a restructuring scheme for stressed assets for MSME borrowers with credit facilities of up to Rs 25 crore.
Acharya on Saturday advocated judicious allocation of finance to entrepreneurs. He also talked about the public credit registry being set up by the RBI and how it would make risk assessment of the borrower easier once done, and reduce interest rate for the borrower. It will take three to five years for every financial transaction to be recorded and the registry would be built up in a modular manner, he said.
“Increasing stress in the sector is a matter of concern. A comprehensive approach needs to be adopted to understand the problems and challenges faced by MSMEs, for their holistic development,” RBI said after the recent monetary policy meet. It proposed to set up a panel by the month-end for “holistic development” of the sector. A report is expected by June 19.