No stressed MSME loan to be declared NPA: Finance Minister Nirmala Sitharaman

New Delhi: The government on Thursday asked banks not to declare any stressed loan account of MSMEs as NPA till March 2020 and work on recasting their debt.

At a press conference after meeting PSU bank heads, Finance Minister Nirmala Sitharaman said there already exists a circular from the Reserve Bank that provides for stressed loan accounts of MSMEs not being declared non-performing assets (NPAs).

She said banks have been asked to follow that circular and not declare any stressed MSME loan as NPA till March 2020 and look at recasting their debt. This would help the MSME sector, she said.

Also, banks have identified some NBFCs that they can lend to so that liquidity and credit is made available to those seeking money, she said.

The finance minister said that public sector banks will hold meetings with NBFCs and retail borrowers in 400 districts beginning next week to provide credit to borrowers, including homebuyers and farmers.

The public meetings will be held in two tranches. The first will be held between Tuesday (September 24) and September 29 in 200 districts and another 200 districts will be covered between October 10 and 15, the minister said.

She said the idea is to ensure maximum credit disbursal during the festive season. Diwali, which falls in October this year, is considered as the biggest shopping season of the country.