Addressing the media after the meeting of the GST Council, Union Finance Minister Nirmala Sitharaman said that the economy is facing an extraordinary ‘Act of God’ situation, which may result in an economic contraction.
As per the Union government’s calculation, the compensation requirement by the States in the current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore is expected to be met from the cess levied in the GST regime. Hence, the total shortfall is estimated at Rs 2.35 lakh crore.
Her statement of “Act of God” was immediately latched on by former Finance Minister P Chidambaram who tweeted “If the pandemic is an ‘Act of God’, how do we describe the mismanagement of the economy during 2017-18, 2018-19 and 2019-20 before the pandemic struck India? Will the FM as the Messenger of God please answer?”
Ahead of the roll out of one-time debt recast for resolution of Covid-19 related stress in bank loans, Sitharaman will hold a review meeting with bankers and heads of non-banking financial companies (NBFCs) on September 3 for smooth and speedy implementation of the scheme. The review meeting will focus on enabling businesses and households to avail of the revival framework on the basis of viability, necessary steps like finalising bank policies and identifying borrowers, and discussing issues that require addressing for smooth and speedy implementation, the Finance Ministry statement said.
The Reserve Bank of India (RBI) earlier had permitted one-time restructuring of both corporate and retail loans. Banks are in the process of getting a board-approved restructuring framework in line with RBI’s framework and eligibility defined by the RBI in its notification on August 6.
Restructuring benefit can be availed by those whose account was standard on March 1 and defaults should not be over 30 days. Besides, the KV Kamath Committee is working on recommendations on financial parameters like debt service coverage ratio, debt equity ratio post resolution and interest coverage ratio for recasting corporate loans.
Its recommendations will be notified within 30 days of setting up of the panel, which means the notification is likely to be out by September 6. The resolution plans to be implemented under the framework may include conversion of any interest accrued, or to be accrued, into another credit facility, or granting of moratorium and/or rescheduling of repayments, based on an assessment of income streams of the borrower, up to two years.
However, despite all these measures, at the ground level, the common middle-class is still battling the financial crisis and the most visible being the hapless condition of the Punjab and Maharashtra Cooperative (PMC) Bank’s customers.
Last year in September, the Punjab and Maharashtra Cooperative (PMC) Bank scam surfaced, putting the lives and savings of nearly nine lakh depositors at stake. Even after more than 300 days, lakhs of affected depositors are stranded and left to fend for themselves with an extreme handicap; deprived of their entire life savings, their earnings and their livelihoods; and denied what was rightfully theirs. More than 65 people have died waiting for their money which was deposited in PMC.
It has been an agonising fight, with thousands of PMC victims raising their voices at every forum and street and lately on social media and television news. Along the way, there have been crushing stories of families being broken and lives being taken because of the injustice of this cruel scam. Customers are now losing patience and are very candidly blaming all politicians openly for this mess.
The Punjab and Maharashtra Cooperative (PMC) Bank scam was discovered in September 2019. It is a fraud that has led to a charge sheet of 12,000 pages on how 20,149 dummy fictitious bank accounts were allegedly created to dupe the bank of Rs 6,670 crore and extend funds to bankrupt companies. The end result of this has been that restrictions were imposed on the bank from conducting normal business, and innocent common middle class customers with their money deposited in the bank for safekeeping were blocked from fully accessing their savings.
When a Finance Minister calls the economic situation as an “Act of God” it sends shivers down the spine of all. In fact, it seems to be a statement made in a hurry and panic. Very vociferously the PMC customers are asking whether the scam in banks is also an Act of God?
