'Banks must consider moratorium on repayment'
The Marathwada Association of Small Scale Industries and Agriculture has asked bankers to consider relaxing the time-frame for repayment and debt restructuring.india Updated: Jan 23, 2009 14:00 IST
The Marathwada Association of Small Scale Industries and Agriculture has asked bankers to consider relaxing the time-frame for repayment and debt restructuring.
MASSIA President, Anup Kabra met with senior officials of SIDBI, State Bank of India, State Bank of Hyderabad, Bank of Maharashtra and Central Bank of India to discuss the issue, the association said in a release.
Banks must consider a moratorium on repayment and debt restructuring with relaxation in servicing of interest in the moratorium period, enhancing working capital limits, additional term loans and bills discounting or factoring, it said.
MASSIA has also appealed to the government that the delayed payment provisions under the MSMED Act should be strictly enforced, wherein payments to small units have to be compulsorily paid within 45 days, the release said.
Also, norms about NPAs concerning MSMEs must be revisited so that lenders and borrowers get time to overcome the temporary stresses and it should not lead to closure of such units, Kabra said in the statement.
The MSMEs are facing a financial crunch mainly due to a substantial payment delay from large units that has gone up to 150-180 days. The delay has thrown a spanner in the cash-flow coupled with extremely low work-order schedules since November 2008, Kabra added.
Despite RBI guidelines, banks have adopted a conservative approach due to which most small units are now on the verge of collapse, he said.