New Delhi, Feb 15 (KNN) Muzaffarnagar based MSME, has reached out to the DC MSME complaining about their ongoing coercive experience with Kotak Mahindra Bank with regards to term loan  availed under ECLGS.

In the letter to the Development Commission, MSME, the Managing Director of Chakradhar Chemicals Pvt Ltd, Neeraj Kedia pointed out that despite writing to the bank and offering them to pay their outstanding in full with interest including the foreclosure charges on term loan, the bank did not respond to their request rather they registered a complaint against the SME.

KNN was informed that in the letter, Kedia said, “….Kotak Mahindra Bank Ltd. (KMB) sent us a renewal offer after about 6 months stipulating repayment of ECLGS for Rs. 1.50 crore by 05/01/22 instead of enhancement.”

Chakradhar Chemicals had not accepted their offer stating that the substantial reduction, that too of ECLGS, would have impacted their working capital adversely.

They had communicated their observations and comments through a letter to the bank.

In its letter to the bank dated 10th December, 2021, Chakradhar Chemicals had said, “Our cash credit arrangement with you was Rs 10 crore while your present letter shows reduction from Rs 10.9 to 10 crore. We are never communicated of any enhancement to Rs 10.9 crore while processing fee is also charged last month on Rs 10.9 crore. It was assured by Ms. Gauri Sabs, VP, that excess amount of processing fee charged would be refunded. You are requested to refund the same forthwith. Further, you have charged the processing fee for 13 months while the renewal is for 9 months only till 15/08/21, hence refund the processing fee charged in excess for 4 months on pro-rata basis also.”

The SME had clearly communicated that they do not agree to the new stipulation of foreclosure/ pre-payment penalties and “the respective clause may please be withdrawn”.

Even after months, Chakradhar Chemicals pointed that “KMB has never responded to our submissions even till date. Our sales have been growing and thus we need more working capital. Since KMB did not respond to our submissions, another bank was ready to give us adequate limits. We thus paid KMB’s outstanding in full with interest including the foreclosure charges on term loan on 05/01/22,” Kedia wrote in the letter.

It’s been more than a month that the Kotak Mahindra Bank has not returned their security documents nor is giving no dues certificate and on top of that the bank is asking the SME to pay foreclosure charges on cash credit limits.

The bank has even registered a complaint on 17th January, 2022 on their own. This has impacted the working capital of the SME and thus adversely affected its manufacturing.

Hence, the SME has requested the DC-MSME to kindly intervene in the matter so that the SMEs no longer are victimized in the hands of lenders and are able to focus on their businesses post Covid crisis.

Coercive tactics used by some of the leading private sector lenders has been a major concern as it amounts to harassment of small and medium enterprise (SME) borrowers who are already grappling under several setbacks that have aroused during Covid period.

ECLGS is a special scheme which was launched by the Government of India in 2020 in view of Covid 19 crisis.

Its extension until March 2023 along with an increase of Rs 50,000 crore to Rs 5 lakh crore as its guarantee cover was announced by the Finance Minister during the union budget speech on 1st February 2022. (KNN Bureau)