New Delhi, Jul 10 (KNN)  Small businesses will find it even more difficult to get credit from banks because the lenders have now decided to name and shame even the guarantors in the case of defaulters. 
 
The small and medium enterprises are upset over the development as they wonder who will come forward to stand guarantee for them in case the guarantor runs the risk of getting named and shamed.
 
“The industry ministers assure us that the MSMEs will easily get loans starting from Rs 5 lakh upto Rs 5 crore without any guarantors.  But when we go to the banks, they ask us for so many documents and guarantors.  It’s really very difficult for the MSMEs to get loans from the banks. We have to go through so much of trouble,” said the owner of Florist Flower Crafts Kuteera Herbal Products, Priya Vandana Puranik from Belgaum, who is also a member of Association of Women Entrepreneurs of Karnataka (AWAKE).
 
The government has subsidy loans for the MSMEs under which the banks should not ask for guarantors, but when we contact the banks, they make the process so lengthy and difficult, Priya added.
 
UCO Bank, Allahabad bank, Oriental bank have already adopted this approach, where as the State Bank of India (SBI), Bank of India Ltd and Bank of Baroda are also preparing to name and shame corporate borrowers who are not paying them back, according to a media report.
 
The banks have adopted strict measures to recover loans following the advice of the Finance Minister to go after big defaulters.
 
Banks are recovering their loans in the wake of slow economic growth of the country and stressed loans of nearly USD 150 billion - equivalent to more than 10 per cent of bank assets in the country.
 
“Some of the businessmen are doing well in their business. They are even getting profits. They are spending a lot of money to maintain their social status. So, we have to recover loans from them,” said an official.
 
"We are going hammer and tongs to recover loans," said a media report quoting executive director at Bank of India M S Raghavan. 
 
Bank of India last year began opening debt recovery branches to pursue defaulting borrowers.
 
The Reserve Bank of India has called for better management of bad debts, and wants to strengthen oversight by lenders.
 
Banks tried to recover on USD 10.9 billion in bad loans but managed just a quarter of that through liquidation and lawsuits in the year ended March 2012, the latest data from the RBI shows.
 
Earlier this year, the Reserve Bank of India (RBI) had issued detailed guidelines to all scheduled commercial banks on lending to the Micro Small and Medium Enterprises (MSME).

The guidelines provided a time frame for disposal of loan applications, loan limit for dispensing the collateral requirement and sub-targets for micro enterprises within the Micro and Small Enterprises (MSE) lending, according to an official statement.

RBI had advised banks to achieve 20 per cent year-on-year growth in credit to MSE and 10 per cent annual growth in the number of micro enterprise accounts in terms of the recommendations of the task force on MSME under the chairmanship of the Principal Secretary to the Prime Minister, the statement added.

Further, banks were advised that allocation of 60 per cent of the MSE advances to the micro enterprises has to be achieved in stages - 50 per cent during 2010-11, 55 per cent in 2011-12 and 60 per cent in 2012-13.   (SD/KNN)