Chennai: Almost a week after the announcement of a ‘mega economic package’ for MSMEs by Union Finance Minister Nirmala Sitharaman, entrepreneurs in the sector allege that they are still not able to avail the benefits.
Bank officials say they are yet to receive the guidelines from the Central government and Reserve Bank of India due to which they are not able to disburse the funds.
Nirmala Sitharaman last week unveiled a slew of measures for MSMEs as part of the economic package to counter Covid-19 outbreak, which included Rs three lakh crore collateral-free automatic loans for small businesses and two separate funds to provide equity support.
It is said that loans can be availed by existing borrowers with upto Rs 25 crore outstanding, and Rs 100 crore turnover. The fresh loan amount can be up to 20 per cent of a company’s outstanding.
However, bank officials say they cannot start issuing loans unless a government order with the complete guidelines is issued.
“So far we have not received any communique from the Central government about the scheme. The announcement has been made but the guidelines that should be followed while allocating the loan is not clear. We are expecting it within this week following which we can start disbursing funds as per the announcement. But, again, we have to follow our own set of rules too,” said a bank official.
Former National president of All India Manufacturers Organisation K E Raghunathan said it will take atleast 15 days time frame for the announcement to get implemented.
Explaining the process involved, he said first the loan has to be approved by the Cabinet. “Following this, the scheme guidelines and terms of conditioning will be sent to RBI which will inturn be communicated to other banks. Funds will be allocated for each bank based on their appetite. Then each bank will frame policy of disbursal within the bank and circulate to all branches within. When all this is done the bank manager will get in touch with eligible borrowers to check if they need the loan,” he said.
He further said that entreprenuers can also approach the bank and check if they are eligible for the loan.
Raghunathan added that the biggest concern from MSME is the serviceability of very high rate of interest at 14 per cent by NBFC in which many MSMEs are borrowers.
“If a MSME unit does not get this facility within the restrictions and conditions proposed, what is the alternative course?. For a start-up company or an industry without any existing bank facility currently, how will they access funds for meeting this emergency situation?” he said.
Raghunathan added that since lockdown has been relaxed at many places, MSMEs who have restarted their operations are facing high pressure for payment to suppliers, staff advance requests, repair of machines as they were idle for 55 days, servicing of EMI, GST, ESI, PF and interest commitments.
“MSME have hardly 10 days left (for June) and time is running us out. I request the kind attention of MSME Ministry to help them,” he said.