Plea to increase NPA time limit from three to six months

Representatives from the Micro, Small and Medium Enterprises on Monday appealed to the Reserve Bank of India and the government to enhance the loan default period from three to six months for declaration as non-performing asset (NPA).

Some of the entrepreneurs also sought reduction in interest rate charged for loans from 12 per cent to six per cent under Micro Units Development and Refinance Agency (MUDRA) Bank Scheme.

The requests were made during a town hall meeting with the stakeholders organised by the RBI. Regional Director of RBI R.N. Dash called for periodical meetings on the problems encountered by MSMEs and explained how the banks had been mandated to treat giving loans to the sector as priority sector lending.

Admitting that the MSME entrepreneurs were facing problem with regard to obtaining finance and timely settlement of dues for the goods delivered by them, he said periodic review by the district level consultative meeting, State level bankers’ committee and mandal level committee as well as the empowered committee would always help addressing the grievances.

Underlining the importance of coordination mechanism, he said MSMEs always were in need of hand-holding and gave details as to how special campaigns like Startup India and Make in India were aimed at encouraging MSMEs. He told the bankers that they should not insist on collateral security for loans below Rs.10 lakh and collateral free loans up to Rs.1 crore under Credit Guarantee Fund Trust for MSME.

General Manager of District Industries Centre B. Gopalakrishna said the deadline for declaration of NPA for bad debt should be extended from three to six months for at least manufacturing sector as several MSMEs were not receiving the payments within the period from the government, the bigger companies and others.

He suggested that every Industrial Estate should have at least one specialised branch for MSME to ensure easy lending of loans.

One of the highlights of the meeting was narration of the plight by Karunakara Rao, a local entrepreneur on how his MSME unit turned sick due to difficulties in securing loan from a premier bank and later due to harassment and marketing problem.

Visakha Autonagar Small-Scale Industrialists’ Welfare Association (VASSIWA) president A.K. Balaji said the interest rate for MSMEs should not exceed beyond the single digit. RBI General Manager G.J Raju presided over the meeting.

(Source :- The Hindu)