RBI director Marathe presses for bold initiatives to revive MSME sector, amid COVID-19 crisis

The government and the Reserve Bank need to come out with a bold and comprehensive package to help small and medium enterprises tide over the unprecedented crisis created by COVID-19, said veteran co-operator and RBI central board director Satish Marathe.

Piecemeal initiatives will not help the industry as this is an exceptional crisis and warrants exceptional response, Marathe told PTI.

The coronavirus crisis is likely to end in the next three to six months, but the industry, which bore the brunt of slowdown during 2019, will take much longer to recover, he said.

Referring to the recent measures announced by the government and the RBI to mitigate the impact of the pandemic, he said, these are only for short term and may not yield the desired results as the problem is severe and has been further aggravated by the lockdown.

There is a need for a bold and comprehensive package to ensure that the industry, especially unorganised sector and MSMEs, comes back on track as quickly as possible once coronavirus is contained and the lockdown is lifted, said Marathe, who is also the founder member of Sahakar Bharati.

In a letter written to Finance Minister Nirmala Sitharaman, Sahakar Bharati said announcements made by the government and the central bank would make little impact both on the borrowers and lenders.

There is a need to relax bad loan guidelines for classification of non-performing assets (NPA), it said, adding the delinquency period should be raised from 90 days to 180 days.

In India, Marathe said, a business is run with support from bank credit unlike in developed economies where it is propelled by capital. '