As businesses come to a halt due to the nationwide lockdown, banks and industries have sought government guarantees on loans.
Smaller businesses, with limited cash-flow, have been the worst hit and, unlike their bigger peers, are unable to manage the disruption.
Lenders, through their lobby body Indian Banks’ Association (IBA), have suggested that the government guarantee all incremental loans to small businesses.
According to estimates by bankers, the sector needs incremental loans of at least ₹50,000 crore, and a guarantee by the government will allow risk-averse banks to start lending.