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Updated: October 16, 2012 17:22 IST

MSMEs see no light at the end of the loan tunnel

    R. Sairam
    M. Soundariya Preetha
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The present spell of power crisis in most parts of the State has forced micro, small and medium enterprises (MSMEs) to approach the Reserve Bank of India (RBI) with an interesting request: suspend the application of non-performing asset (NPA) norms till March 2013.

Last week, associations representing MSMEs met RBI Regional Director N.S. Viswanathan in Chennai to press their case.

As industrial production has plummeted, units are unable to fulfil old orders, much less attract new ones. Consequently, cash flow has completely dried up for MSME units, says Tamil Nadu Small and Tiny Industries’ Association (Tanstia) vice-president KR. Gnanasambandan.

This has made servicing their debts very difficult and the threat of default on bank loans is looming large over thousands of small industries in the State.

According to an estimate there are over four lakh MSMEs operating in the State, excluding Chennai. They suffered losses to the extent of Rs.1,000 crore due to inadequate voltage.

Mr. Gnanasambandan estimates that the total outstanding amount of micro, small and medium enterprises (MSMEs) in Tamil Nadu to public and private sector banks will be in the range of Rs. 10,000 crore.

The banks have also been requested to restructure both principal repayment and interest of their loans to MSMEs and provide 25 per cent of the sanctioned limit as ‘ad hoc’ limit to help the units meet their working expenses.

The annual credit plan on MSMEs for the Coimbatore district envisaged 14.81 per cent higher this year than last year. Though the data on loan off-take by the sector during the last three months are not yet available, the district administration has forwarded to the RBI the appeals submitted by the industrial units. Since many of these units are unable to make timely repayment, they have sought one year moratorium.

The manager of a nationalised bank at Kurichi, an industrial area in Coimbatore, says the bank has at least two instances of loans sanctioned but not obtained by the units in the area, apparently due to the problem of power cut.

During the meeting, the RBI official assured the industry representatives that their requests will be taken up with senior officials at the headquarters.

(with inputs from N. Anand in Chennai)

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