Chennai: Lack of working capital is the biggest concern for the MSME sector, with the sectoral data on bank credit by the RBI showing a fall of 3.8% year-on-year as on September 27 and outstanding loans shrunk by Rs 14177 crore to Rs 3.63 lakh crore.

Loans for the medium sector has shrunk 1.3% for the same period.

“Working capital from banks are not available on time while the 59Minutes loans are much longer than how they are promoted. Though these loans get sanctioned on the bank’s online portal, they do not appear for tellers at the branch counter,” said a manufacturer. This is not the first time MSME sector players are raising concerns over lack of access to credit, risk capital, perennial problem of delayed payments.

A Coimbatore-based automobile parts manufacturer, said, “Most banks negotiate for One Time Settlement (OTS) on defaulted MSME loans which have fallen as non-performing assets (NPA), but, business owners do not have enough resources to payback at once.”

Speaking on resolving delayed or non-payments on orders by public sector enterprises, principal secretary to the MSME department Rajendra Kumar said, “We have helped to resolve over 400 cases in 2019, including complaints received on State and Central government departments. MSME players must file complaints on our Samadhaan platform for speedy recovery, we have run many quasi-judicial hearings under my purview to help such settlements.”

“Sanctioning loans against collateral for MSME loans is not always the norm, viability business and growth of MSMEs are top priorities. Backing loans with security comes way below the list of criteria to be met,” Indian Overseas Bank MD and CEO Karnam Sekar, said.

Published On : 05-11-2019

Source : Times of India