Work in progress on easy bank loans, tax cuts if crisis deepens

The government and the Reserve Bank of India are looking to ease NPA norms for small and medium sector borrowers and also give collateral free loan to sectors most affected due to COVID-19.

The Finance Ministry is also working on relief to informal sector workers, roadside vendors and daily wagers, who may lose their livelihoods if the virus crisis deepens.

That aside, a relief package for the worst-hit airline industry is in the offing, with preparations at the advanced stage to cut taxes on aviation turbine fuel (ATF) among other things to improve their financials.

The Centre charges an excise duty of 11% on ATF and states upto 30% at present.

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The finance ministry has received a number of requests from the stakeholders to delay the declaration of companies’ accounts as NPA for one year as the lack of business coupled with fixed cost will make many accounts NPAs.

This relaxed NPA rule could be extended for those sectors which have high dependence on China and have already started feeling the supply chain disruption.

Earlier, the government had asked the state-owned banks not to declare stressed assets of small and medium industries as NPAs till March 31 in the wake of a slowdown in the Economy.

The provision may get extended by a few more month after the new health emergency impacting their businesses, an official said.

The request has also come to the finance ministry for collateral free lending of upto Rs 2 crore for MSMEs on the back of COVID-19 production cut hurting their financials.

The RBI, on its part, has enhanced the market liquidity with an additional bond purchase Rs.10,000 crore.

Sectors such as textile, handicrafts, apparel, gems and jewellery, mobile phones and accessories, solar industries and pharmaceuticals have high exposure to Chinese imports.

The finance ministry has held a series of meetings with the sector experts and various inter ministerial meetings indicate that some decision could follow soon on easy bank loans.

One sector, which is likely to suffer more due to restricted mobility among people is the roadside vendors. They could lose their livelihood even in case of a partial lock down, the official said, adding the government is working on some financial aid for daily wagers if such an emergency arises.