With production slumping to just 30 per cent of capacities member units of BHEL Small and Medium Industries’ Association have sought the support of financial institutions in the form of a moratorium on payment of interest and repayment of principal amount for a year.
Due to the slowing down of industrial projects, the high cost of bank loans was making it difficult for the industries to fulfil their repayment obligations. The financial pressure was weakening the units.
Without the support of financial institutions at the critical juncture, many units will get wiped out, according to M. Srinivasan, BHELSIA president.
Appealing to banks to grant interest and principal moratorium for a one-year period to the member units, he suggested that repayment be spread over an increased period.
There have been several instances of banks willingly supporting industry, at both domestic and international levels, by granting moratorium and extending repayment periods, thus easing cash flow, he said, requesting the financial institutions to provide working capital term loans to tide over the difficult period.
Change definition NPA
The NPA (Non Performing Assets) definition of three months must be immediately changed to suit the changed industrial situation.
Else, many units will be classified as NPA, impacting their credit history and adversely affecting them in times of revival, Mr. Srinivasan apprehended.
Citing the notification of separate NPA norms for agriculture sector based on crop cycles, he said industry sector also requires exclusive norms considering that a project cycle takes at least six months.