The aim of the bank recapitalisation plan is to strengthen the MSMEs to the tune of Rs 5 lakh crore, Finance Secretary Hasmukh Adhia said on Monday.
The aim of the bank recapitalisation plan is to strengthen the MSMEs to the tune of Rs 5 lakh crore, Finance Secretary Hasmukh Adhia said on Monday. The Narendra Modi government in October last year announced a massive Rs 2.11 lakh crore bank recapitalisation plan, which Hasmukh Adhia, at a meeting at FICCI said, was mainly for the MSMEs.
“The Budget 2018 also seeks to give a fillip to MSMEs, which have a critical link with large enterprises but are often constrained because of delayed payments from OEM buyers. These enterprises are therefore in need of timely credit. The effort of the government in capitalizing banks to the tune of Rs 5 lakh crore should come as a measure of relief to MSMEs as they would be able to tap the banks for their credit needs,” Hasmukh Adhia said.
Speaking on the steps taken by the government to change the landscape of the MSMEs, Finance Services Secretary Rajeevv Kumar said that Udyami Mitra, an online application, and tracking system was recently launched by the government, which received 20,000 hits on the first day.
He said that MSMEs are the backbone of the economy, generating 11-12 crore employment. He said that bank recapitalisation along with IBC is changing the credit landscape. When we did asset quality review, we found that nonperforming assets have increased to about Rs 7 lakh crore and these accounts were already existing with banks.
“Bank recapitalisation came into existence due to bad health of the banking sector. After asset quality review of the banks stressed assets rose, needing more provisioning. The Insolvency & Bankruptcy Code (IBC) has opened up an exit route,” Rajeev Kumar said at the post-Budget interaction.
He pointed out that the effort now would be to make the process of lending technology-driven, strive for financial inclusion, funding the unfunded by establishing links between mobile phones, banks and ‘Aadhar’ and professionalising bank managements and boards. He said that with regard to the insurance reforms, the government was looking at promoting insurance as the next big step. Consolidation and listing of three general insurance companies were also on the agenda after GIC was listed last year.