Micro units turn to different sources for financial needs

Chandran (name changed), a micro unit owner for nearly two decades, employs six workers to run lathes, making spares for pumpsets. Recently, he had sold jewellery to pay wages to workers and electricity charges.

He had to shell out at least ₹ 50,000 a month towards wages, pay electricity charges, and rent even if the unit is closed for lockdown. “Last year, during the two month lockdown, the micro units suffered losses and had to sell some jewels to meet the expenses. When the lockdown was lifted, the orders picked up only gradually. With lockdown again this year, I had sold the remaining jewels and also taken an advance from a scrap dealer,” he says.

The private finance companies are not willing to lend as there is no collateral to give. Banks do not give much support to the micro units. So, the unit owners approach different sources and take an advance amount or sell or pledge jewels, he says. Though Coimbatore district is under lockdown till June 21, the units are paying electricity charges with penalty since June 15. “We need to meet the family expenses too. There is absolutely no help from the Central government. The Electricity Board is collecting charges with penalty. There is no relief of any kind for these units,” he says.

J. James, president of the Tamilnadu Association of Cottage and Tiny Enterprises, said that many of the micro units had already borrowed by money lenders and hence were borrowing from relatives or pledging jewels now. “The unit owners need to pay wages to workers, electricity charges, rent for the unit and their house. When there is lockdown for a month, the units cannot meet these expenses and hence they turn to different sources for money,” he said.

The local money lenders are the bank for most micro unit owners. The money borrowed is repaid on monthly basis. Though the lenders charge exorbitant interest for the money given, the unit owners have no other option, he adds.

An officer at the Coimbatore district said the district administration held a meeting with representatives of micro finance institutions recently. Even those from unregistered institutions took part. They were asked to not insist the borrowers to repay the loans immediately, she said.

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Printable version | Jul 24, 2021 5:10:17 AM |

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