Covid-19, Govt Support to MSME/SME and Banks- India

Indian Economy is going thru a turbulent time, Declining GDP, Hope, Chances and moral of Common business men.

For sake of showing good numbers Government has been issuing Various lucrative scheme to Promote new Startups, Individuals and Existing businessmen, under Various scheme like CGTMSE Cover, and many other cover guaranteed by Government of India but neither such Guarantee are implementable for recoveries, nor differentiated Rate of interest is recovered.

This kind of Schemes Pressurizing Bankers not only for Completing Targeted numbers, but concessional rate of Interest and further defaults affect Balance Sheets

If Government is serious to extend genuine support to Borrowers than they must have to accept their responsibility of paying Insurance and difference in Rate of Interest of Prevailing Market and Concessional ROI proposed to such borrowers

Govt Must relieve Nationalized Banks for Implementation of such Schemes, if really govt wish that Loan to be distributed to eligible Entrepreneurs and reach to last person standing in queue then the responsibility of Distributing CGMSE, PSB 59 and similar scheme to be nominated to Complying NBFC in India.

NBFC has Customer centric approach compare to Banks where Customer has to go to banks and to be in queue and with help of Mediator or Chartered accounts to fill various complicated forms and Financial Planning, most of CGMSE covered Entrepreneurs are neither CA nor Qualified enough to prepare such complicated Papers    

 If the responsibility of Distributing PSL, CGTMSE and such loan than good results will be there

1) Default rate will be brought down heavily, because NBFC’s default ratio to Small Borrowers are not bad, only Big business house manipulated with NBFC

2) Distribution of Loan to eligible and needy, more swiftly

3) Bank’s Books won’t be affected with NPA

4) Bank officers will be relieved with such tedious work and would be able to concentrate on large account loans

5) Such Large business of NBFC will increase employment opportunity to locals, whereas banks are not allowed to employee more people easily  

6) Govt Can extend such Insurance and Pay back Lower rates of Interest to   NBFC.

7) Every Quarterly Such NBFC Loan portfolio to be either bought by Nominated banks with a Guarantee that no NPA would be coming in bank’s book

It is  my person Experience during my stay and observe this, and may differ or may be wrong