Christmas gift for business defaulters
What is it about ? Government may bail out defaulters. Business owners are blaming demonetisation and GST for losses and reducing revenues…
What is it about ?
Government may bail out defaulters. Business owners are blaming demonetisation and GST for losses and reducing revenues.
How is it doing so?
Government may inject INR 83,000 crores in public sector banks. 21 state banks control 70% of banking in India. RBI has stopped 11 out of 21 from lending.
RBI may also allow debt laden banks to start lending to big and small businesses. Small businesses are facing the brunt of demonetisation, GST and wrong policies of the government. Government.
Government launched a quick loan disbursal scheme in November.
Why does it matter?
It’s a fact that demonetisation and GST affected businesses. It is leading to lower economic growth. Lack of credit in the system leads to less business activity, which leads to less expenditure and savings. The easiest way is to recapitlaize banks and kickstart lending.
Bigger picture:
Experts think that such measures will not help economy. It’s a short term benefit.
Andy Mukherjee,an economist, writes how it will harm in the long run.
Deepak Shenoy, CEO of Capital Mind, explains how using RBI’s reserves will be a wrong move.
The RBI is preparing a public credit registry, which will help reduce interest rates for borrowers due to easier risk assessment: RBI deputy governor Viral Acharya
Acharya advises against forbearance or helping loss making firms with lax rules and more money.