Reserve Bank Director Satish Marathe on Thursday urged Prime Minister Narendra Modi that all banks should be asked to reschedule loan accounts to help industry, especially MSMEs, to deal with the impact of coronavirus pandemic.
"These are exceptional times and the need is to take exceptional steps," Marathe said in his letter to the Prime Minister.
Merely by injecting Liquidity, reducing interest rates, providing guarantees through SPVs/SIDBI, relaxing delinquency norms in the current year will not result in revival of Indian Economy, he said, while referring to the recent measures announced by the government and RBI to mitigate the impact of the pandemic.
"We need to seek active involvement of our banking sector to rebuild the economy. If Advances Accounts get classified as NPAs, due to both lockdown and slowdown, chances of revival of such accounts would be bleak, as bank Officials continue to be apprehensive of possible future investigations by CVC, CAG & CBI," he said.
Moreover, he said, when advance accounts get classified as NPAs, banks get adversely impacted financially, which would ultimately result in the government infusing additional Capital.
He suggested keeping in abeyance, all norms relating to Income Recognition & Assets Classification, provisioning, and downgrade of borrowal accounts, reporting to Credit Information Companies eg CIBIL, for all accounts that must have got classified as NPAs during the just concluded financial year 2019-20.
Permit all banks to reschedule all borrowal (loan) accounts, wherever necessary, without the same being downgraded, he said, and suggested to allow them to fund accrued/unpaid interest, which be allowed to pay in six monthly installments commencing from October 1, 2020.
"The lockdown and the slowdown have completely disrupted operations of our manufacturing Sector comprising small, medium and large units, crippled our supply chains and small and retails business and also lakhs of Units in the unorganised Sector have almost come to a complete stand still," he said.