Loan restructuring for small businesses welcome, but solve this malaise

Banks may have to tweak the way they appraise loans to the sector

The Reserve Bank of India’s (RBI) restructuring scheme for loans to micro, small and medium enterprises (MSME) loans up to Rs 25 crore has been hailed as a welcome breather, but a deeper malaise may be lurking.

A former chief executive of a state-run bank (and now a director on the board of a private bank) feels the stress is much higher than what has been reported. “It could be at 21-22 per cent of MSME loans. These levels will not be reflected in reported numbers due to restructuring. Had the debt recast not come through, MSMEs’ woes would have