Telangana Industries and IT Minister K.T.Rama Rao on Tuesday appealed to banks not to invoke provisions of the SARFAESI Act, 2002, against micro, small and medium enterprises defaulting on loan repayments without assessing viability of the businesses.
Seeking to highlight the significance of banks differentiating between large industrial and MSME borrowers, he said use of the Act even in case of one or two defaults by the latter led to closure of the enterprises and industrial sickness. Ahead of initiating action, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the banks should undertake a techno-economic viability study of the units, he said.
Public sector banks can stand out by adopting such an approach and instil confidence among micro and small entrepreneurs, Mr. Rama Rao said, referring to the Telangana Industrial Health Clinic initiative of the State government to address incipient sickness in MSMEs.
The Minister was speaking at the launch of MSME Prerana, a unique and innovative business mentoring programme of Indian Bank. The programme in Telugu is to develop managerial and financial capabilities of MSME entrepreneurs besides creating awareness of various initiatives taken by the Centre and State governments and other agencies.
Hailing the bank, the Minister proposed a collaboration between Telangana State Finance Corporation and Indian Bank to develop innovative mechanisms to support MSMEs, especially to address their issue of collateral by way of creating a revolving fund. Noting that Indian Bank was associated with some of the biggest programmes of the State government such Kaleshwaram and Mission Bhagiratha projects, Mr. Rama Rao said there were many more areas for collaboration, including for development of women entrepreneurship through the WE Hub.
Indian Bank MD and CEO Padmaja Chunduru said the bank was keen to associate with T-Hub, by way of an MoU, to extend support to startups. It would also explore the possibility of working with WE Hub. On MSME Prerana, she said the bank wanted to equip the entrepreneurs with relevant knowledge and enhance their confidence as well as decision making abilities. The bank has launched the programme in Tamil Nadu, Puducherry, Uttar Pradesh and Maharashtra, besides in Telangana, and intends to roll out in all major languages pan India in a phased manner.
Indian Bank’s Credit Deposit ratio in Telangana is around 179% as against the commercial bank average of 110%, she said. On the need for credit discipline among borrowers, Ms. Chunduru said the bank was restructuring loans under certain government schemes.
Senior officials of the bank and Telangana Industries and IT Secretary Jayesh Ranjan addressed the programme.