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MSEs want interest waiver amid Covid-19
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SME Times News Bureau | 28 Apr, 2021
With Covid-19 related lockdown in different parts of the country
affecting production and sales, micro and small scale units are pleading
for interest waiver, moratorium and lending against credit guarantees.
An
official of a public sector bank preferring anonymity told IANS that if
the government does not come out with a package, then the
non-performing assets (NPA) of the banking sector are set to surge ahead
this year.
"Already 40 per cent of our member units are sick for
want of working capital and raw material. Further the increase in raw
material prices have hit the units hard," Tamil Nadu Small and Tiny
Industries Association (TANSTIA) President S. Anburajan told IANS.
He
said many units supply the products to public sector units (PSU) and
government utilities and are penalised for delayed supplies.
"We
would like the PSUs not to penalise their small sized vendors for delay
in supplies during the pandemic period. There should be a moratorium for
loans and interest could be waived for the small units," Anburajan
added.
Demanding delinking of medium units from micro, small and
tiny units, TANSTIA past President V.S. Narasimhan told IANS: "Banks
should be made to lend against credit guarantee rather than collaterals.
The government should also infuse additional capital into the Deposit
Insurance and Credit Guarantee Corporation so that banks have the
confidence to loan, based on the credit guarantee."
"Countries
like the US and Japan have big hearts for small units. In most of the
other countries, loans are given against credit guarantee and not
collaterals," he said.
Narasimhan also demanded waiver of interest by the banks for small units.
He
said small industrial units have to run their units failing which they
would be losing their workforce (mainly migrant workers), customers as
well as vendors and regaining them will be difficult.
Bankers are worried about the impact of Covid-19 second wave on the economy.
Tamilnad
Mercantile Bank Managing Director and Chief Executive Officer K.V. Rama
Moorthy said he is apprehensive about how it would pan out and whether
there may not be another countrywide lockdown.
With Covid-19
vaccination, the situation would improve and it is for the Central
government and the RBI to decide on loan moratoriums for micro, small
and medium enterprises (MSME), he said.
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