MSMEs seek breather in bank loan repayment

Ch. R. S Sarma Visakhapatnam | Updated on January 19, 2018 Published on January 18, 2016

The local MSMEs urge the Government and the RBI to extend the bank loan repayment default period from three months, after which the loan automatically becomes a non-performing asset (NPA), to six months as in the past, as many of them are finding it difficult to comply with the norm due to various factors beyond their control.

The plea was made by representatives of the MSMEs at a town hall meeting organised by the RBI here on Monday to facilitate interaction between the representatives of banks and MSMEs.

B. Gopalakrishna, the General Manager of the District Industries Centre, Visakhapatnam, said at least in the manufacturing sector the time should be extended to six months, as many MSMEs were not receiving the payments within the period from the Government, the bigger companies and others. He also said a specialised MSME branch should be opened by any of the commercial banks in each of the industrial estates.

B.V Rama Rao, the chairman of the Federation of AP Industries and a member of the empowered committee of the RBI, said the time should be extended to six months and the interest rates for MSMEs should be brought down from 14 per cent to 9 per cent. "Even for Mudra loans the rate of interest, at 12 per cent, is too high. It should be halved, as otherwise the purpose will not be served," he pleaded.

R.N Dash, the Regional Director of the RBI, both AP and Telangana, said the policy-related issues would be taken to the notice of the Government and the other problems raised by the MSMEs would be addressed. "The MSME sector is highly diverse and it is afflicted with various problems at the local level and they should be addressed locally. The importance of the sector cannot be denied, as it is a big employment generator after agriculture," he said.

Karunakara Rao, a local entrepreneur who ran an MSME here in one of the industrial estates for 30 years from 1980 to 2010, narrated the difficulties he faced with the SBI in securing adequate finance for his unit and how ultimately it had become a sick unit.

Balaji, the president of the local MSME association, pleaded that the interest rate for MSMEs should never exceed the single digit.

G.J Raju, the General Manager of the RBI, presided over the meeting.

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Published on January 18, 2016
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