Hit by the global meltdown, the micro and small enterprises (MSEs) in Punjab have demanded a relaxation in the rate of interest and banking charges as well as rehabilitation of sick units, among others.
There are more than 200,000 MSE units in the state with an annual production of Rs 30,873 crore. These provide employment to over 900,000 workers. Also, the working capital of these MSE units — mainly concentrated in Ludhiana, Jalandhar, Amritsar and Mandi Gobindgarh districts — is about Rs 5,100 crore.
Speaking to Business Standard, Avtar Singh, general secretary, Chamber of Industrial and Commercial Undertakings, said: “In order to boost this sector, the interest on the bank cash, credit limits should be reduced from 12 per cent to 10 per cent. Further, due to the financial slowdown, the equated monthly instalments (EMIs) against the term loans taken by the industry, which was returnable to 36-48 months, should be extended from 5 years to 10 years.”
“The competitiveness of the SMEs has been badly affected by the high costs of credits,” he added.
He further said that to avoid the non-performing asset (NPA) account against interest recoveries, the period should be extended from 90 days to 180 days, due to general slowdown of payments from buyers.
The Punjab National Bank today convened a special meeting of the state-level Bankers’ Committee in Amritsar to redress the problems faced by the MSEs in the state and to have a first-hand feedback from representatives of industries on containing the adverse impact of the global crisis on the MSEs, and to ensure availability of adequate credit for proper growth of the MSE sector.
Echoing similar sentiments on the forum, Joginder Kumar, president, Federation of Tiny & Small Industries of India, said: “MSEs with an investment of Rs 1 crore have adversely been affected as the importers have cancelled their orders. Manufacturing units, particularly the light engineering industry, is in a bad shape.
Even KC Chakrabarty, CMD of PNB, said there has been a decline (in the MSE sector) in credit to enterprises with investment in plant and machinery up to Rs 5 lakh. Demanding support from commercial banks, Joginder Kumar also said that service charges being taken by banks are quite exorbitant, and should be brought down. The federation also maintained that commercial banks do not encourage the rehabilitation of sick viable units.
He said each public sector bank will also set up regional MSME (micro, small and medium enterprises) care centres to facilitate MSM entrepreneurs for quick redress of their grievances.
On the initiatives taken by the Reserve Bank of India to boost the MSME sector, Chakrabary said the public sector banks will grant need-based ad hoc working capital demand loans up to 20 per cent of the existing fund-based limits, in respect of units having overall fund-based credit facility up to Rs 20 crore.
The loan will be repayable in one year, with a provision of moratorium of six months, during which only interest will have to be serviced.
