Neeraj Kedia, managing director, Chakradhar Chemical Pvt Ltd, a Rs. 36-crore firm that manufactures micro nutrient fertiliser, applied for a top-up loan of Rs. 7 crore with a large public sector bank in January.
It took more than four months for the loan to be sanctioned.
"I feel our banks do not have the wherewithal to process loans within shorter times period and the delay naturally hinders business operations." said Kedia.
In the new dispensation of bustling financial reforms, he may no longer find a cause to complain.
In a bid to provide a push to small businesses, finance minister P Chidambaram has directed government banks to honour and process loan applications to micro, small and medium enterprises (MSMEs) within a month of application.
The finance ministry has asked bank chiefs to aggressively deal with delays in processing loans to MSMEs.
Banks would now have to complete all formalities including assessment of economic viability of business proposals within the stipulated time.
Banks have been often delaying sanctioning of loans, leading to choking of funds for the small industry sector.
"If SMES submit the required documents, it is not difficult for us to process the loan applications within a month," said M Narendra, chairman and managing director, Indian Overseas Bank.
"We have a fixed turnaround time and we adhere to it, this time-frame could differ from case-to-case, but it is a very positive step from the government side that it is taking this initiative," said a senior SBI official on the condition of anonymity.