Page 30 - Banking Finance September 2020

ARTICLE

Reserve Bank of India to boost the business (including business. Now the roles of banks have become more
MSMEs). It includes important to pass the benefit to the actual beneficiary
Y Rs. 3 lakh crore collateral free automatic loans for including business and MSMEs.
business, including MSMEs,
Y Rs 20,000/- crore subordinate debt for MSMEs Digital Lending Infrastructure - Indian banks now have
enough digital infrastructure & they are providing almost
Y Rs 50000/- equity infusion through MSME fund of funds.
all the banking products through digital channels whether
Y Global tender to be disallowed up to Rs 200 cores. it's an asset product or the liabilities product. Various digital
Y Rs. 2500 cores EPF support for business and workers for initiative for the government and RBI has been taken as far
3 more months. as the banking products are concerned. It includes
Y TReDS-Trade receivable bill discounting platform
Y EPF contribution reduced for business & workers for 3
months- Rs 6750/- Y E Way bill system
Y Rs 30000/- crores liquidity facility for NBFC/HCs/MFIs Y Psbloanin59minutes .com
Y Rs 90000/- crore liquidity injection for DISCOMs Y Udyamimitra portal
Y Rs 50000/- crore liquidity through TDS/TCS reductions Y Vidyalaxmi portal for education loan

Under Rs 3 lack crore collateral free loans Emergency credit These platforms are providing enough digital lending
line guarantee scheme (ECLGS) has been announced which infrastructure for the needy business enterprises. With the
is being provided by The National Credit Guarantee Trustee ongoing pandemic stress, we can observe that the digital
Company to Banks, NBFCs and Financial Institutions. channels are the better option to deliver the transactions
According to this scheme eligible businesses including and services. The offline transactions have significantly
MSMEs, get a pre-approved sanction limit of up to 20 % of reduced because the physical currencies may be a carrier
loan outstanding as on 29th February 2020. This is in the of virus. With the help of the QR code-based payment
form of additional working capital term loan facility. This system, internet banking, points of sales terminal, cards,
scheme will help small businesses to come out from the mobile banking and the mobile wallets people are doing their
impact of Covid 19. transactions and enjoying banking services.

Support from Banking - Banking is life line of any economy. Challenges before Banking - On the other hand, when there
It provides support to business & economy when it is actually is a slowdown in the economy, banks cannot be untouched
needed. In the difficult time of Coronavirus pandemic, the by the adverse effect of the Covid 19. Banks are going to
role of banking has become more significant. face number of challenges during Covid and post Covid
period. Low credit growth, increasing NPAs, low NIM and
RBI has also announced that banks and other lending shrinking CASA will be the key challenge before the banking
entities, including nonbanking finance companies and industry. Before Covid period also banking industry was
microfinance companies, are permitted to pass-on the relief under pressure because of many incidents that happened
as forbearance measure due to precarious situation of including the NBFCs and Yes bank crisis.
COVID-19 to borrowers. It includes three months
moratorium on payment of instalments for term loan, The dual responsibility of banking - Banking is having dual
deferment of interest payment for three months for working responsibilities, one they have to maintain their internal
capital loans, easing of working capital finance, classification immunity and on the other hand, they have to work as a
as special mention account (SMA) and some relief in credit blood for the economy and business by continuous credit
card operations. flow. The responsibilities of the banking are huge to be
redesigned and reshaping the business and economy. The
One thing is certain from the above discussion is that the business may have a very good strategies to transform their
government and Reserve Bank of India has taken all the business model & to stand again, but it requires funding and
steps which are necessary to boost the immunity in the here the role of banking comesinto picture. Banks may face

30 | 2020 | SEPTEMBER | BANKING FINANCE