Canara Bank’s offer of financial assistance to the micro units engaged in the manufacture of pumps and accessories seemed godsend to these small players.
Says K. Maniraj, President of Kovai Power Driven Pumps and Spares Manufacturers Association (KOPMA), “we have been struggling for ages, seeking finance support from private money lenders, friends and relatives as commercial banks did not entertain our cause. There seems to be a ray of hope now,” he said, referring to Canara Bank’s proactive effort.
Financial literacy
The bank had organised a sensitisation programme to provide financial literacy and banking awareness to the 200-odd members of the association at the Indian Chamber of Commerce and Industry here, recently.
Bank officials highlighted the launch of two special schemes viz., Canara MSE Pragathi and Canara MSE Unnati.
“Micro and small-scale units can avail collateral free loans under these schemes,” the official said.
Under Canara MSE Pragathi, no collateral would be asked for loans up to a maximum of Rs 10 lakh and this can be got at 10.5 per cent.
Canara MSE Unnati scheme, on the other hand, is for credit facilities above Rs 10 lakh up to Rs 1 crore. No collateral is required under both these schemes.
The borrowing rate under the Unnati Scheme is 11.20 per cent. Women beneficiaries are offered a special discount of 0.5 per cent under the scheme, the official explained.
The General Manager of Canara Bank’s Coimbatore Circle Office U. Ramesh Kumar, told Business Line that he saw huge opportunity in lending to these small and micro pumpset manufacturers, and thereby bringing them into the banking fold.
“We’ve received loan application from 170 members. The quantum of assistance sought ranges between Rs 2 lakh and Rs 80 lakh,” a Canara Bank official said.
Maniraj conceded that a good number of technologically-sound micro units were outside the ambit of bank finance because of certain lop-sided policies of the Centre.
“There are a number of unregistered units amongst us. By raising an invoice, we are committed to pay excise duty at 8 per cent and an additional 5 per cent towards VAT.
"Further, we could not afford the ISI-mark. But this does not mean our products are inferior quality wise.”
“Around 75 per cent of the micro units operate as unregistered firms. Bankers have preferred to keep us at a distance,” he said.
To a query on the risk factor in lending to such units, Ramesh Kumar said, “we have to first get them out of the clutches of private money lenders; we will monitor their progress,” he added.
revathy.lakshminarasimhan@thehindu.co.in