Micro Small Medium Enterprise (MSMEs) want reclassification of income recognition asset classification (IRAC) norms on non performing assets (NPA).
MSME representatives called for longer interest moratorium period to help start-ups in the repayment of loans to the banks at a meet organised by CII. At present, Indian banks declare MSME loans as NPAs when non-payment of loan interest exceeds 90 days.
There are 26 million MSMEs that has availed bank credit to an approximate tune of Rs 1.85 lakh crore till 2009. TL Viswanathan, mentor, Bharat Yuva Shakti Trust (BYST) that has fostered some 2,000 MSME entrepreneurs, appealed to revise the NPA declaration norms to aid the teeming number of MSMEs that highly depend on bank credit for their working capital requirements. ?Banks should give a thought about stretching the moratorium on loan repayment period to help the struggling start up MSMEs?, he said.
Drawing a distinction between small and micro industries in need of bank credit, Viswanathan said micro industries need softer policy on credit than small industries in the segment. R Sowrirajan, deputy general manager, Bank of Baroda handling MSME loan portfolio at BoB said, ?MSME loan restructuring is similar to farm loan restructuring. When corporates could do loan shopping by floating tenders to attract lowest interest rate quoting banks, it is unfortunate that MSMEs do not enjoy such clout?.
SMEs also demanded Implementation of setting up of MSME fund, co-owned by banks? consortium to play the role of Venture Capitalist, co-partner and PE promoter in providing the equity, sweat or working capital for MSMEs.
