CHENNAI: The Micro, Small and Medium Enterprises (MSME) sector has urged Union Finance Minister Nirmala Sitharaman to direct Reserve Bank of India (RBI) and the banks to desist from imposing the Non-Performing Assets (NPA) norms for MSME units for a period of two years post the coronavirus lockdown.
According to KV Kanakambaram, president of The Industrial Estate Manufacturers Association, it will take about 6-12 months for the MSME sector to recover from the current situation post the lockdown, as they are all dependent on big companies for orders.
"We feel that at this crucial time, the three-month moratorium on interest and principal will not be sufficient for this sector, as all the units will face severe liquidity crunch. A majority of the units in the MSME sector will be forced to close down," Kanakambaram said.
He also urged the finance minister to instruct the RBI and all the banks to provide financial credits for MSME sectors with a long repayment period of 60 months with at attractive interest rate of 7 per cent for all types of loans including working capital loans, terms loans, mortgage loans and term loans for machinery, since all these loans are being given by taking sufficient collateral loans from the entrepreneurs.
MSME entrepreneurs, during times of crisis, will always take it as a personal issue if a loan turns an NPA; settle them by selling the house, land or jewels, and again start, Kanakambaram said in a letter to the finance minister. "Therefore the banks don’t have to fear about the loans not being recovered from our MSME community," he wrote.