The Hindu Business Line : Union Bank initiative for MSME sector

Chennai, Dec. 23 Union Bank of India has said that 100 specialised business banking branches will focus exclusively on the Micro, Small and Medium Enterprises (MSME) to support their working capital needs as they face a delay in payment from larger companies due to the economic slowdown.

Addressing a press conference, Mr P.Y Nagar, Field General Manager (Tamil Nadu, Kerala and Puducherry), Union Bank of India, said the bank has identified 10 MSME clusters across the country where slowdown is more prominent and the branches will take pro-active measures on a case-to-case basis. These 100 branches are supported by centralised processing facilities called SME Sarals which are equipped with specially trained staff including credit analysts and technical officers.

The banks are to reschedule term loans and provide extension of holding for inventory. Other measures would be conversion of working capital requirements by carving out of working capital term loan which will help MSMEs hit by delayed payments from their debtors and re-phasement of term loan instalments.

When asked about the default rates among the MSME in the last three months, Mr Nagar, said categorisation and classification of bad debts for the current quarter will be done on December 31, 2008. “So far we have not seen noticeable defaults, we have an active credit monitoring system and closely monitor special mention accounts which may slip to become a bad debt,” he said.

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