Export-oriented micro and small scale industries, which are facing the heat of the global slowdown, have approached the Indian Banks? Association (IBA) to restructure their loans and sought extension of additional facilities.
However, the IBA is of the view that these sectors should reduce prices of their products. Representatives from some of the affected sectors like textiles, leathers, garments, heavy machines and gems and jewellery met the IBA chairman and Bank of India CMD, ?TS Narayanasami in Mumbai on Wednesday to deliberate on the issue.
As per an estimate, these sectors alone are having outstanding loans in various banks to the tune of Rs 1,50,000 crore as on date. Some of the demands raised by the sectors during the meeting include easing margin requirements for taking loan, review of working capital, relaxation in NPA norms, interest subvention, moratorium on term-loans and above all, availability of export credit at cheaper rates.?
Briefing the media after meeting the representatives from these sectors, Narayanasami said, ?We wanted to have an update of our own assessment of the export sector on the eve of our forthcoming meeting with Reserve Bank of India (RBI) governor D Subbarao, which is slated for November 28.?
Terming most of these problems as genuine, he said while some of their demands, like margins? issue, can be addressed at our level, the remaining demands can be sorted out by intervention of the RBI and the government only. The RBI has already taken proactive steps, based on our perception.
Still, there is a feeling among the these units that some more issues related to their problems should be addressed by the government, said Narayanasami.
He added that a cut in prices by the manufacturers will take care of manufacturing, distribution and consumption and banks expect units to come forward and reduce prices .?
In view of the contraction in demand from the global market, the inventories of the domestic units in these sectors have gone up considerably, said Narayanasami.
He said, ?The margin requirements of their inventories necessitate further investment by entrepreneurs. This is putting stress on them. They want to ease in margin requirements, reduction in margins, which currently vary between 15 and 25%.
Their bills are getting paid belatedly due to contraction in demand.This is prompting banks to charge more interest on delayed period, he added.