Amethi, Apr 22 (KNN) The micro, small and medium enterprises (MSMEs) in Congress Vice President Rahul Gandhi’s constituency Amethi are facing huge financial crunch and have voiced concerns over closure of the units due to lack of support from the banks.

The Amethi Chapter of the Industries Association (IIA) met Rahul Gandhi in this context and highlighted that if the matter is not addressed immediately, it would lead to closure of more than 150 units in Jagdishpur Industrial Area.

The MSME units in the area, which are in dire need of working capital, have been served recovery/auction notice by the banks.

“IIA Amethi Chapter had a meeting with the Rahul Gandhi on Thursday. The MSMEs in the area are facing huge financial crunch due to rising inflation and high cost of raw materials,” IIA President Manish Goel told KNN.

He said, “The units are not getting any support from the bank. The banks have served them recovery and auction notices and have also rejected their plea for restructuring and revival.”

The MSME representatives from the area had been meeting the UP Government and RBI officials in this regard. For the first time, they have approached Rahul Gandhi and submitted a memorandum to him for their help.

Goel said, “There has been no help from the banks to revive the units.”

The IIA representatives have decided to HRD Minister Smriti Irani on Sunday.

Talking to KNN, Shahnawaz Ahamad, Chairman, IIA Amethi Chapter, said, “The industries in the area were growing quite well few years back. But suddenly in the last once year, the MSMEs are in a sorry state due to absolute non-cooperation by the banks.”

Ahamad pointed that while the recovery and auction should be the last option for the banks to recover their loans, in the area the banks consider that as their first option and send recovery/ auction notice to the units as soon as the unit turns NPA after 90 days of defaulting.

Out of 250 units in the hub, more than 80-90 units have already closed and 150 are on the verge of closure due to this.

Ahamad said that the banks there are charging exorbitantly high interest rates to the industries. “The interest rate for the agro-industries should be 1% but the banks here have charged some of the industries as high as 14-19 per cent interest rates.”

The problem is also non-release of working capital funds from the banks even after approval of loans, he added.

The IIA Amethi Chapter Chairman highlighted that they have approached RBI, MSME Ministry, Central and State Government officials in this regard but nothing has been of help to them so far. He however praised the District Commissioner of Faizabad for supporting the MSMEs.

The entrepreneur, who has a biscuit unit in the area, said that if an entrepreneur defaults to pay the interest to the banks; the banks eye selling the property and the asset much conveniently as the cost would be more rather than spending time and energy on reviving the unit.

“We met Rahul Gandhi yesterday and brought up the matter. Gandhi assured the entrepreneurs that he won’t let the MSMEs die and would take up the matter seriously,” Ahmad said.

KNN also spoke to Rakesh Kumar Upadhayay, owner of Puran Industries in Jagdispur Industrial Area, said that, “In 1997 we had a loan of 8.5 lakh with a bank. Now in 2016 the loan has increased to 2.5 crore. The bank has already sent us recovery/ auction notice but the problem here is there are no takers also.”

“The rate of our property alone is Rs 5 crore. If we are allowed to sell that, we can easily pay off the loans but the banks don’t want to help us in any ways,” Upadhayay said.

“Now we are so fed up of meeting the officials and Ministers that none of us want to approach them anymore,” he added.

The MSME Ministry had last year notified the Framework for Revival and Rehabilitation of Sick Units. Recently, the Reserve Bank of India (RBI) had issued the Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs) along with operational instructions, to all banks for immediate implementation.

Under the Framework, cases for all MSME loan accounts where principal or loan instalments are overdue for 60 days or above are to be compulsorily placed before the district committee for stressed MSME assets for developing corrective action plan (CAP).

The Framework issued by the RBI is a much revised version of the identical notification issued by the Ministry of MSME way back in May, 2015, but  being issued by RBI is sacrosanct for the Banks. (KNN Bureau)