Credit scheme fails to bail out MSMEs as banks turn cautious

Shivani Bhakoo

Tribune News Service

Ludhiana, July 1

The micro, small and medium enterprises (MSMEs) are facing a hard time in getting loans sanctioned from banks. Industrialists maintained that under the Emergency Credit Line Guarantee Scheme, the banks were sanctioned Rs 1 lakh crore to help the MSME sector. However, of the total 6.32 crore MSMEs, only 30 lakh enterprises have got the benefit so far, which is only about 5 per cent.

All Industries Trade Association president Badish Jindal told The Tribune that till June 19, Rs 1,262 crore was sanctioned to the MSMEs. Of the sanctioned amount, only Rs 656 crore was released to over 51,000 units.

“There are over 2.55 lakh units in Punjab, including new, sick and healthy units. The state government had promised to provide loans to the MSMEs, but the banks are not cooperating. The banks are providing loans to the healthy units only, whereas the sick units are not being entertained, and the new units are not being given loans without collateral,” said Jindal.

The industry maintains that the government has come up with National Credit Guarantee Trust Company, which will provide 100 per cent security to banks. Despite that, the banks are not sanctioning the loans. The Reserve Bank of India has also instructed the banks to sanction the loans to the MSMEs with caution.

Gurmeet Singh Kular, president of the Federation of Industrial and Commercial Organisation, said the MSME owners were not satisfied with the way the banks were treating their units.

“The interest rates vary from bank to bank. If the banks really want to help the sector, they should provide easy loans so that the MSMEs are back on the track after the lockdown period. Since the government has sanctioned a huge amount to banks, the latter shouldn’t be reluctant in providing loans to help the industry,” said Kular.