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“Banks should exert their influence over big companies to settle their dues to small and medium enterprises (SMEs) on time,” said Uma Shankar, Regional Director, Reserve Bank of India (RBI).
Addressing the ‘SME CEO Knowledge Forum’ sponsored by UTI Mutual Fund, in association with The Hindu Business Line and SIDBI and KPMG as knowledge partners, Uma Shankar pointed out that SMEs have no muscle power to tell big companies to pay on time or a voice to tell them to pay their dues on time. “It is here the banks should step in to help them for their survival.”
She pointed out that most SMEs are a ‘one-man-show’ units and they face hindrances such as lack of manpower, lack of ability to market products, prepare financial statements, adhere to norms or get technical support or know-how. Also, these SMEs lack resources to advertise their products or have constraints in getting funds.
Uma Shankar said several institutions such as SIDBI (Small Industries Development Bank of India) have been set up in the country to help SME units/entrepreneurs, while commercial banks have been specifically instructed to set aside some portion of lending to the SMEs.
She also advised SMEs that after getting financial assistance, they should adhere to fiscal discipline in their daily business functioning so that the repayment schedule is not violated.
They should also prepare financial statements according to ICAI norms, and internally they should seek the co-operation of their employees to adhere to production timelines and quality.
Bharath L. Ghia, Country Head, SME & Distribution Channel of UTI Mutual Fund, said SMEs should explore the option of investing in mutual funds which provide better returns. B.P. Shashidar, President of Kassia (Karnataka Small Scale Industries Association), said from his experience, operating a small unit was not an easy task. “It is a mix of risk, tension, pressure, anxiety, progress, thrill and satisfaction too as they contribute to the society at large.”
Ram Nath, Chief General Manager, SIDBI, said SMEs should stop asking for subsidies and instead seek competitive rates.
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