Southern States - Tamil Nadu-Chennai   

SIDBI has failed us: small units

By Our Special Correspondent

CHENNAI JAN. 17. Smallscale and tiny industries today expressed `disappointment' at the functioning of the Small Industries Development Bank of India and felt that it `failed' to serve the purpose.

At an interaction meeting with the Chairman and Managing Director, P. B. Nimbalkar, various associations said many SIDBI schemes, conceived for promotion and protection of small and tiny units, were only on paper. Commercial banks being lending agencies seldom followed SIDBI circulars. The associations wanted the SIDBI to lend directly to the industrial units rather than through banks. For example, though there was a direction that they extend loans, without asking for collateral security, up to Rs. 5 lakhs, many banks were insisting on it and as a result, the industries suffered.

The president of the Tamil Nadu Small and Tiny Industries association, K. V. Kanakambaram, wanted the SIDBI to extend the bill discounting scheme, now available to corporate units, to government undertakings , statutory boards and corporations. This, he said, would bring an additional revenue of Rs. 500 crores to the bank.

The past president, V. S. Narasimhan, said the SIDBI was functioning like any other commercial bank and was not supporting the small and tiny units. He wanted a viable credit guarantee scheme evolved for the units.

The president of the Industrial Estate Manufacturers Association, K. Gopalakrishnan, wanted the bank to help to improve infrastructure on industrial estates. As the State Government did not have sufficient funds, he wanted the bank to fund state financial institutions. Unless the estates were endowed with better infrastructure, it would be difficult to attract foreign buyers.

T. V. Hariharan, past president, said the interest charged by commercial banks for small and tiny units was on the higher side. The banks had no justification for collecting interest at 14-16 per cent when they were paying less than 10 per cent for deposits.

V. S. Karunakaran, director of the Small Industries Service Institute, felt that managers of the commercial banks needed counselling as they were not following the SIDBI guidelines.

Leelakrishnan, vice-president, Small and Tiny Industries association, stressed the need for improving the quality of power and communication facilities on industrial estates.

A. S. Kannan, MLA, who spoke on behalf of tiny industries, regretted that neither ministers nor bureaucrats were responsive to their demands. The recent directive that the credit guarantee scheme would be available only for loans above Rs. 5 lakhs would affect tiny units.

M. S. Parthasarathi, president, National Confederation of Small Industries, suggested that a separate organisation be formed to look after the tiny sector.

In his reply, Mr. Nimbalkar disputed the claim of the units and said that in the last 12 years, the SIDBI had sanctioned loans to the tune of Rs 75,000 crores, out of which Rs 52,000 crores was disbursed. Though the SIDBI could not finance the small and tiny units directly, it was instructing commercial banks through various fora to assist them. Many bank managers were afraid of extending assistance to industries for fear of default.

Development fund

There was a proposal to float a small industries development fund with the SIDBI as the nodal agency.

Commercial banks which failed to achieve their target in advancing loans to the small and tiny units would be asked to contribute to the fund.

Referring to the demand for technical guidance to the small units, he said a technology bank would soon be set up by converting the existing technical bureau for small enterprises. A web site was already available providing technical information to the units.

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