A recovery mechanism to collect loan dues from the Medium and Small Enterprises (MSEs) will be put in place in Andhra Pradesh soon.

The Department of Industry and Commerce, Govt of Andhra Pradesh had accepted a request from the bankers to ensure proper recovery of loans, according to a communication to banks from the State Level Bankers’ Committee (SLBC). The modalities are being worked out.

Mounting NPAs

The non-performing assets (NPAs) in the MSE sector have been increasing significantly in the recent past. As per SLBC data, the overdues stood at Rs 3,241 crore as on June 30, 2014 accounting for 11.9 per cent of the total outstanding.

The NPAs were 6.34 per cent of total outstanding loans of Rs 27,317 crore.

The high percentage of bad loans is also adversely impacting the credit disbursal target for the year. Out of a target of Rs 10,850 crore disbursals for the year, only 22.89 per cent has been achieved so far.

Further, targets under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme were also not met.

According to SK Kalra, Executive Director, Andhra Bank, the Government should set up a central registry for MSMEs for planned growth of the sector while banks would also need to make efforts to channelise credit to them.

The MSMEs should also be provided proper infrastructure facilities including power supply to the sector to arrest causes of sickness of these units.

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