BANKS – MSME UNITS – NPA ISSUES

AT PRESENT BANKS ARE FACING RECOVERY PROBLEMS OF LOANS ISSUED.  THE REASONS MAY BE DUE TO

THE BANKS UN NECESSARILY WORRYING ABOUT THE LOANS SANCTIONED TO MSME SECOTR, ON SECURITY OF INDUSTRIAL, PERSONAL, COLLATERAL PROPERTIES OF BORROWERS WHICH IS MORE THAN 250% OF THE LOANS GRANTED. MAJORITY OF MSME UNITS ARE THE FAMILY CONCERNS. THEY CANNOT EMPLOY PROFESSIONALS TO MANAGE THEIR ACTIVITIES. THEY HAVE GOT TALENT, ENTHUSIASM TO DO SOME MANUFACTURING ACTIVITY WITH THEIR TALENT, CREATIVITY. THE MSME SECTOR GIVES EMPLOYMENT TO THE TUNE OF 1/3^RD OF TOTAL EMPLOOYMENT IN MANUFACTURING SECTOR, CONTIBUTES FOR EXPORTS TO THE TUNE OF 1/3 OF TOTAL EXPORTS. THE DELAY IN RECOVERY MAY BE DUE TO THE FOLLOWING REASONS:-

1. LONGER MANUFACTURING PROCESS: THE DURATION OF MANUFACTURING PROCESS MAY BE MORE THAN 30 DAYS TO 240 DAYS IN MANY MSME UNITS. THE RAW MATESRIAL PURCHASE, MANUFACTURING PROCESSES, TESTS CONDUCTED AFTER MANUFACTURE BY THE PURCHASE LEADS TO MORE TIME.
2. LONGER COMMENCEMENT PERIOD: THE PERMISSIONS, LICENCES TO OBTAINED, POWER, MANPOWER, MATERIAL, CONSTRUCTION MAY LEAD TO MORE TIME THAN THE EXPERCTED PERIOD OF COMMENCEMENT OF PRODUCTION.
3. FINANCIAL ASSISTASNCE: THE REQUIRED FINANCIAL SOURCES MAY NOT BE TIMELY AVAILABLE, BANKS ALSO DELAY DUE TO SOME PROCEDURES, GOVERNMENT GRANTS, INCDENTIVES RECEIVED.
4. MSME HANDHOLDING STAGE NOT FOLLOWED BY BANKERS: MANY TIMES TERM LOANS, WORKING CAPITAL, OWNERS MARGINS, INCENTIVES GIVEN BY THE GOVERNMENTS ARE ADJUSTED AGAINST LOAN INSTALMENTS. HANDHOLDING STAGE OF ADVISORY, GUIDANCE BY THE BANKS ARE NOT MADE AVAILBALE TO MSME UNITS.
5. GOVERNMENT INCENTIVES: CENTRAL, STATE GOVERNMENTS DECLARE INCENTIVES TO ENCOURAGE THE ESTABLISHMENT OF INDUSTRIES.THE BANKS ARE NOT CONSIDERING THE DELAY IN RECEIPT OF GOVERNMENT INCENTIVES DUE TO TECHNICAL REASONS.
6. RECOVERY PROCEEDINGS: IMMEDIATELY AFTER THE DELAY OF 90 THE BANKS ARE PROCEEDINGS UNDER RECOVERY PROCEEDINGS INSISTING FOR ‘TOTAL OUT STANDING BALANCE’ PAYMENT INSTEAD OF ‘OVER DUE’ AMOUNT TO REGULARISE THE LOAN ACCOUNT.
7. SEIGING THE LOAN ACCOUNT: THE BANKS ARE PROCEEDINGS TO SEIGE THE ENTDIRE LOAN, SAVINGS, CURRENT ACCOUNT, DEPOSIT ACCOUNTS TO RECOVER EVERY RECEIPT NOT ALLOWING EVEN ELECTRICITY BILLS, LABOUR, PURCHASES. INSTEAD THEY COULD HAVE RECOVESRED 5% TO 10% OF SALE PROCEEDS.
8. AUCTION OF PROPERTIES: IMMEDIATELY AFTER 90 DAYS, THE BANKS ARE PROCEEDING FOR AUCTION OF COMMERCIAL, INDUSTRIAL, PERSONAL, GUARANTORS’ PROPERTIES THOUGH THERE ARE OTHER POSSIBILITIES TO RECOVER THE LOANS. THE BANKS HANAD HOLDING, PRECAUTION, STEPS TO RECEIVE INDSUTRIAL ICENTIVES, RECEIPTS FROM DEBTORS, STOCKS, PROCESSING OF GOODS, DEPOSITS WITH VARIOUS DEPARTMENTS.
9. DISCOURAGEMENT TO ‘MSME’ UNITS: DUE TO THIS ATTITUDE OF BANKERS, THE ENTDREPRENEURS ARE NOT SHOWING INTEREST TO ESTBLISH INDUSTRIAL UNITS WHO CAN GIVE EMPLOYMENT OF MANY TECHNICAL, NON TECHNICAL PEOPLE. JOB WORKS TO ANCILLIARY SUPPORTING UNITS.
10. ‘MAKE IN INDIA’ VS.’ MARKET IN INDIA’: THE BANKERS APPROACH, ATTITUDE IS IN FAVOUR OF ‘MARKET IN INDIA’ AS AGAINST ‘MAKE IN INDIA’. IT IS EASY TO LOANS FOR TRADING, MARKETING, FINISHED PROUDCTS RATHER TO MANUFACRUTING, SKILL EMPLOYMENT, EMPLOYMENT GENERATION, WEALTH CREATION.
11. ENCOURAGE ‘MSME’ UNITS: MANY OF THE UNITS ARE SHOWING GOOD PROGRESS, ORDERS FROM WORLD WIDE REPUTED COMPANIES FOR THEIR COMPONENTS. THE CREATIVITY OF ENTREPRENEURS IS TO BE ENCOURAGED. THEY NEED MORE TIME ONLY, NO FUTHER LOANS.