Reeling under the impact of delayed payments from buyers, the Faridabad Small Industries Association (FSIA) has sought more time from banks for discounting invoice bills.
In its suggestions to the Reserve Bank of India (RBI) for the new monetary and credit policy for 2009-10, the FSIA has demanded that the RBI issue directions to all banks to start discounting invoices up to 180 days, in view of the deleterious effect on MSMEs of delayed payments.
FSIA president Rajiv Chawla said only a few banks have issued the necessary circulars to their branches. Many banks are yet to take action, because of which the relief to MSMEs has not materialised.
Chawla said that with the ongoing crisis that has affected MSMEs on account of the liquidity and cash crunch arising out of delayed payments, the benefits of increased sanction limits could reach MSMEs only if banks discount bills up to 180 days, instead of the current 90 days, and reduce their margins from 25 per cent to 10 per cent. He said this was necessary to offer them relief.