Industries in Coimbatore region are pinning their hopes that the special meeting of State Level Bankers’ Committee (SLBC) convened on Monday would come out with a solution to their demand for a one-year moratorium on payment of loan instalments that would help them come out of the crisis.

They believe that bankers would appreciate the fact that any insistence on loan repayment when their units were working far below capacity would only push them deeper into a financial crisis.

Besides, steps being taken by the State Government to tackle power shortage would help end the crisis faced on the power front, putting industries back on the road to recovery by this time next year.

Speaking to Business Line , R. R. Balasundharam, President, Indian Chamber of Commerce and Industry (ICCI), Coimbatore, said acting on an ICCI representation made to the Union Finance Minister P. Chidambaram, the Finance Secretary D.K. Mittal had suggested to the IOB Chairman and Managing Director to convene a meeting of SLBC to discuss their plea.

The Finance Secretary, while referring the ICCI representation to M. Narendra, Chairman and Managing Director, IOB, Chennai, had felt that it would be appropriate if SLBC held a meeting and the DLCC, Coimbatore, also discussed the issue, to resolve them.

The IOB CMD has subsequently called for a meeting of SLBC in Chennai on Monday to discuss the issue of one-year moratorium on repayment of loan principal and interest.

In his representation to the Finance Minister, the ICCI President said that because of the acute power shortage, industries were facing a serious financial crisis and production levels have dropped below 30 per cent (of capacity) which also pushed up cost.

Balasundharam had said that industries were unable to meet their repayment obligations to bankers and were also not able to obtain fresh credit.

The high interest rates further added to their burden and sought the intervention of the Minister for a one-year moratorium on loan repayment.

At present most of the industries were not operating to full capacity ‘due to power cut (of) up to 12-14 hrs a day’. Usage of gen-sets only added to their product cost and the units were unable to supply in time to their customers.

Balasundharam said from the statements of Chief Minister and the Electricity Minister, it was expected that the power position would improve in a year. Hence, the ICCI had asked for a one-year moratorium on loan repayment.

It was for the individual units to approach their respective banks on this issue once a decision was taken.

Balasundharam said industries were facing dilemma on the labour front too. With skilled labour in short supply, industries did not want to deny wages even to idle labour for fear of losing them. Prolonged power shortage also held the prospects of flight of business to other states and some of the industrialists were also toying with the idea of shifting to other states that offered a slew of incentives.

He reasoned that if financial institutions lend the industries a helping hand at a time of severe crisis rather than further pushing them deeper into it, industries would be able to recover faster when the power situation improved.

The proposal made for loan moratorium was a win-win situation for both the bankers and the industries, he said.

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