SRINAGAR: The industry body, the Federation of Chambers of Industries Kashmir (FCIK) has urged the Reserve Bank of India (RBI) to seriously monitor the implementation of Credit Guarantee Fund Trust for Medium and Small Enterprises (CGTMSE) and other such schemes made available by Government of India (GOI) for smooth credit flow to MSMEs. These schemes, it regretted are being “treated with contempt” by Banks in Jammu and Kashmir, a statement issued by the FCIK said.
The Regional office of RBI held its 59th Empowered Committee meeting on MSMEs for J&K and Ladakh on Thursday under the chairmanship of General Manager Sandeep Mittal which was participated, among others, by representatives from departments of MSME, Industries and Commerce, SIDBI, Banks and industry stakeholders. Former President and Member Advisory Council, Zahoor Ahmad Bhat represented FCIK in the meeting.
While speaking in the meeting, Zahoor Ahmad Bhat regretted that while the credit flow to MSMES by majority of banks was low and dis-satisfactory, almost all banks denied or hesitated in sanctioning loans to start-ups and deserved MSMEs under CGTMSE scheme. He informed the Empowered Committee that some banks had changed the very nomenclature of the scheme by sanctioning loans up to Rs 10 lakh under it which otherwise banks ought to sanction without any requirement of collaterals or guarantors as per RBI guidelines. He said that the scope of collateral-free financing under CGTMSE had been enhanced by GOI during the current year by modifying its ease of operations for mutual benefit of MSMEs and banks besides placing UT at par with North eastern states.
FCIK regretted that despite the banks agreeing that there were clear instructions from GOI and RBI for sanctioning collateral-free and Guarantor-free loans to MSMEs, no bank actually implemented the scheme in letter and spirit. The progress in funding MSMEs under other centrally sponsored schemes was also dismal which put a question mark on contribution of banks in massive industrialisation programme launched by the Government.
The FCIK urged upon the Empowered Committee to find a foolproof structured mechanism for ensuring and monitoring smooth credit flow to MSMEs under all schemes available to their counterparts in other states.
While participating in the agenda point on Non-performing Assets (NPAs) in MSME sector, the FCIK pleaded for humane approach by the banks in the matter. Zahoor Bhat gave a number of reasons for distress caused in MSMEs which included change of marketing and procurement policy, non-implementation of Delayed Payments Act, set back to export-oriented units during / after pandemic and other grave issues of unconducive atmosphere and natural calamities. He said that instead of looking into all these problems, the banks had launched undesired recovery drive which had harassed the concerned MSMEs and had also the potential to discourage prospective entrepreneurship in an era of growing unemployment.
FCIK has sought intervention of RBI in devising a mechanism for restructuring of loans and providing exit policy for distressed MSMEs after taking all aspects of their failure into consideration. FCIK regretted that although there was a well-defined mechanism of ‘Framework for Revival and Rehabilitation of MSMEs” with its guidelines laid down by RBI, the instructions was hardly being followed by banks not the least under the spirit of scheme.