HOW NBFC & OTHER SUCH INSTITUTIONS CAN HELP SME'S INSTANTLY BEYOND ECL AND OTR FRAMEWORK
SUGGESTIONS/ RECOMMENDATIONS
1 Topping up on existing loan
Small Term Loans/ Business Loans- Allowing top up of the loan to the extent loan repaid against existing sanction (more than 18 months relationship of each transaction )
Moratorium of both principal and interest can be given for next 12 months, then ballooning method of payment. What businesses want is time
2. Releasing Liquid security
Previously, Some portion of total security might have been taken as liquid security being 1st ever relationship or other wise . Keeping in view special situation and vintage with client, such liquid security can be replenished by other available / new security in line with nature if available security. Tail end charges can be proposed (to be taken after 24 months) for such accommodations
3 Releasing Proportionate Security
Allowing businesses, release of proportionate security against their repayment for more than 18 months, if fresh disbursement is not possible so that they can explore other options
4 Conversion of existing unsecured loan
Existing lender can take over unsecured high cost business loan (normally above 17-18% as secured business loan , against existing collaterals which is generally on higher side keeping in view the current exposures. Such secured loan can be @12-13%.
This will decrease monthly EMI burden and increase overall viability of business
5 Make NFB facility interchangeable with fund based
Most of such already sanctioned NFB facilities are under utilised . This can be made interchangeable with fund based .
6 Allowing OD facility
There is a good scope of allowing such OD facility (20% of total sanctioned facility) in lieu of existing fund based working capital limits. As many of businesses may not be able to adhere MPBF norms in short term and still require funds to take care their overheads and operating cycles