{"id":25047,"date":"2019-09-26T18:21:20","date_gmt":"2019-09-26T12:51:20","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=25047"},"modified":"2020-11-16T12:10:52","modified_gmt":"2020-11-16T06:40:52","slug":"loan-melas-for-nbfcs-govt-attempts-to-boost-liquidity","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/loan-melas-for-nbfcs-govt-attempts-to-boost-liquidity\/","title":{"rendered":"Loan Mela\u2019s for NBFCs; Govt. Attempts to Boost Liquidity"},"content":{"rendered":"

The Finance Minister of India has\ndirected commercial banks to hold a meet for NBFCs to credit loans to NBFCs.\nThe step has been taken to increase credit disbursements. The govt. is aiming\nto reach the customer of around 400 districts in two phases before 15 October. <\/p>\n\n\n\n

Introduction <\/h2>\n\n\n\n

India is heading towards its festive season. With the festive season ahead government will be closely monitoring the demand pattern. For that government is focused on boosting investments. The finance minister of India has provided direction to commercial banks for setting up a public meet with NBFCs to disburse credit. It is expected that banks will organize open house meetings in 400 districts of the country<\/strong>. The fair will be organized from 1st<\/sup> October to 15 October. The main idea of the fair will be to push the credit in RAM- Retail, Agriculture, and MSME. <\/p>\n\n\n\n

According to Finance Minister,<\/b>
“…For every one customer who wants the loan, please give to him, but for everyone who you give now, you will bring five newer ones, fresh, somebody, who has never taken a loan from bank’’.<\/i> <\/div>
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Key Highlights <\/h3>\n\n\n\n
\"Loan
Loan Mela’s for NBFCs<\/figcaption><\/figure><\/div>\n\n\n\n

Banks\nto hold open meetings in 400 Districts: <\/h2>\n\n\n\n

After receiving the direction from the Finance minister, commercial banks and NBFCs will visit the 200 districts in 1st <\/sup>phase. The 1st<\/sup> phase will start on 25th<\/sup> September and 29th<\/sup> September. In this phase, credit to retail customers, farmers, and micro, small and medium enterprises will disburse. Simultaneously, more 200 districts will be covered in the 2nd<\/sup> phase between 10th<\/sup> October to 15th<\/sup> October. The process will start by banks when they move their liquidity to NBFCs, NBFCs, in turn, will pass it on to retail customers. New customers will also be welcomed to take the credit benefit during this meet. Individuals from any category like retail, farmers, MSMEs<\/a><\/strong> can seek to affordable credit during this meet.<\/p>\n\n\n\n

This\nwill bring NBFCs, Banks, and Borrower together <\/h2>\n\n\n\n

During the Mela, Banks, NBFCs and\nborrower will come together and will hold public gatherings in 200 districts.\nAlong with this NBFCs will push credit to self-help groups, MUDRA, borrower,\ncustomers looking for housing loans, vehicle loans, MSMEs and farmer producer\norganizations. According to FM Sitharaman, the idea of such gathering is to\nensure maximum credit disbursal during the festive season. <\/p>\n\n\n\n

200\nDistricts to cover by Sep 29<\/h2>\n\n\n\n

The process of disbursing the loan will be completed in two phases. The aim is to cover 400 districts during this aim. First 200 districts will be covered between 25th<\/sup> September to 29th<\/sup> September. However, the remaining 200 districts will be covered in the month of October i.e from 10th<\/sup> to 5th<\/sup> October. Minister of state for finance Anurag Thakur will be in charge of this scheme and will depute minister or MPs to attend these public gatherings. <\/p>\n\n\n\n

Stressed MSME loan not to be declared\nNPAs till March 31, 2020<\/h2>\n\n\n\n

In addition, to push credit in MSMEs, the existing provision of RBI of declaring MSME stressed assets NPA will be kept on the hole. There exists a provision given by RBI to ensure that MSMEs if they are stress assets…the RBI’s existing provisions empower bank not to declare them NPA even after 90 days. According to Finance Minister<\/strong>[1]<\/a><\/sup>, no stressed assets MSMEs will be declared as NPA until March 31, 2020. <\/p>\n\n\n\n

Read More:<\/b> Analysis of NBFC<\/a> Liquidity Crunch in NBFC Sector<\/a><\/mark>.<\/p><\/div>\n\n\n\n

The intention\nbehind ‘Loan Mela’<\/h3>\n\n\n\n

The very first scheme of providing cheap credit in India was started back in 1972, after Indira Gandhi Differential Rate of interest scheme. The said scheme made banks to allocate at least 1 percent loan to the farmer and weaker section of the society at a highly- subsidized interest rate. The main idea behind organizing the fair is to link the weaker part of society directly with banks, to boost rural spending and thereby, rural consumption. <\/p>\n\n\n\n

In the present scenario, where banks are more interested in providing loans to industrialists and corruption in lending is at its peak.  This mela will bring more transparency in the loan process and make it easy for poor people to take benefit of credit provided by the banks.<\/p>\n\n\n\n

Taking Stock<\/strong><\/h3>\n\n\n\n

The finance minister issued a statement on the progress made by PSBs\non measures announced by the RBI and the government in recent weeks. <\/p>\n\n\n\n