Sitharaman readies relief package for MSMEs, NBFCs

PSBs have been requested to reach out to MSMEs to provide bill discounting to them against their dues since they suffer the most from shortage of cash.

Illustration: Dominic Xavier/Rediff.com

The government will ask big corporates to expedite clearing dues worth Rs 40,000 crore to micro, small and medium enterprises (MSMEs), Finance Minister Nirmala Sitharaman said on Monday.

The government will also tweak a scheme for providing a one-time credit guarantee to public sector banks (PSBs) for purchase of pooled non-banking financial companies’ (NBFC) assets to allow more NBFCs to participate in it.

“The corporate affairs ministry has a complete list of companies, which have stated that they owe MSMEs nearly Rs 40,000 crore. We are taking a two-pronged approach so that before Diwali, MSMEs will get the dues,” Sitharaman said.

Corporate Affairs Secretary Injeti Srinivas will write to these big corporates, who have reported this information in their returns, to expedite the payment of dues to the MSMEs, Sitharaman said.

Finance Secretary Rajiv Kumar said the public sector banks (PSBs) have been requested to reach out to MSMEs to provide bill discounting to them against their dues “since they suffer the most from shortage of cash due to non-receipt of dues”.

Banks will compile a list of MSMEs who are willing to avail the bill discounting facility and those who declined it and send it to the finance ministry by October 22.

Through the bill discounting facility, banks will provide capital to MSMEs based on the invoices that they have raised.

To aid NBFCs, the government will allow NBFCs with “investment grade” to participate in the credit guarantee scheme, under which government provides a one-time partial credit guarantee to PSBs for first loss of up to 10 per cent for purchase of high-rate pooled assets of NBFCs totaling Rs 1 trillion, notified in August.

NBFCs with a minimum rating of ‘AA’ are allowed to participate in the scheme.

The pool of assets should also have a minimum rating of ‘AA’, through credit rating agencies accredited by the Reserve Bank of India, according to the norms.

“There are two types of ratings. One is on the pooled assets and the other one on the NBFCs itself.

"Some NBFCs have good pooled assets, but do not have ‘AA’ and above rating so that banks have suggested that NBFCs with rating of investment grade be included in the scheme,” Kumar said.

Economic Affairs Secretary Atanu Chakraborty said the PSBs demanded the change in the norms since rating agencies tend to be strict in their ratings.

The finance ministry will soon issue a clarification to banks to this effect, Chakraborty said.

Banks have identified pooled assets worth Rs 15,455 crore under the scheme, according to a press release issued by the finance ministry.