New Delhi, Nov 15 (KNN) For MSMEs, the situation is like a double edged sword ever after the announcement of demonetization of Rs 500 and Rs 1000 notes was announced on November 8. On one hand they are running out of cash to meet the daily expenses of a unit while on the other hand they are at standstill as no other banking activities are taking place either.

At a time when there is huge rush outside every bank branch across the country, the bank employees are crippled with heavy load of exchanging currency of thousands of people in each branch each day.

At such a time doing other bank works, which is also equally important for the entire ecosystem like loan disbursal, letter of credit, remittances, drafts etc, is simply not an option for the bankers with the existing number of staffs.

KNN spoke to experts from the micro small and medium enterprises (MSME) sector to know their experience and opinion on the same.

Garment exporter Animesh Saxena, Managing Director, Neetee Clothing Pvt Ltd, said, “Everything has come to a standstill especially at the branches which are changing currencies”.

The activities like issuance of Letters of Credit, bill negotiations, export bills, physical remittances, getting bank drafts made are severely affected. Currency hedging, which also requires lot of paper work, is also not smooth, he said.

Talking about the challenges that he is facing in doing business, he said, “Actually, there are number of challenges – firstly all the employees are busy in changing of currency. Secondly, even if the bankers are doing other works, the people waiting outside in queues in large numbers don’t allow anyone to enter the bank for other works. But we are all taking it with a pinch of salt as a much bigger reform is taking place in the country.”

He suggested that the banks should create a small window, may be in the evening hours like 4 to 6, for conducting other activities and the branches which are not public dealing branches should be specialized for conducting such activities.

Meanwhile Pankaj Bansal, an exporter, said, “We are facing problem in general all exporters must be facing , the Banks are delaying the normal business transactions and delaying on the pretext that they are loaded with extra work due to cash transactions due to demonetization whereas this is not true at all as all the banking staff has not been entrusted with this task.”

Bansal, Director, TMA International, said, “ICICI Bank is the worst which delays. There is delay in getting remittances credited particularly. Definitely MSMEs have been impacted as the cash flow is further affected due to delay in getting credit of the payments and we are facing delay in compliance in submission of necessary documentation due to delay from banking side.”

Sharing his experience with the Syndicate Bank where his employee, who went there for some export related document work, and Bansal, “Bank is not allowing him to even enter the branch nor is ready to even listen to his querry.”

Neeraj Kedia, Past President of FISME, said, “There has been a massive impact on the scarcity of manpower in the banks. This has severely affected the businesses.”

Kedia, who is also the Managing Director of Chakradhar Chemicals Pvt. Ltd, said, “Since my business is linked with rural economy it has been impacted more.”

Explaining this he said, “Farmers are unable to get money for their produce so due this they are facing loss and lots of produce are also getting wasted because of no buyers. This is a sowing season and the farmers are unable to but fertilizers. Even the dealers are not accepting cash. The situation must more or less be same for the urban areas too.”

He said this has ultimately reduced the purchasing power of the consumers which is adversely impacting the MSMEs.

“There would have surely been impact on purchasing power of the consumers in the last 7 days and this will hit the businesses of the small sector, the large sector would continue with their business,” he said.

Suggesting that the government flood the market with plenty of money available with banks and ATMs, Kedia said there should be no limit on cash withdrawal for anyone.

He said, “A MSME entrepreneur has to pay wages to labourers, buy fuel, meet logistic expenses etc. The limit of Rs 50000 withdrawal from current accounts for entrepreneurs irrespective of their turnovers is not helping.”

Commenting on the chaos outside the banks for currency exchange, he said if the government was not ready with enough cash to deal with the requirement, then the move is surely taken in “haste”.

Arun Kumar Aggarwal, Director, Vimal Organics Ltd said, “Banks are not able to do any transactions due to heavy rush. And for sheer humanitarian reasons we cannot force the banks to do other works…Ones who have passwords and access to internet are doing NEFT/ RTGS but for other works banks have to be involved.”

Elaborating this, Aggarwal said, “You need bankers for creating a FD..you need a FD for creating a bit bond…then you need a Letter of Credit. All that work is not happening for last 4 days and would not happen for next 2-3 days…so that is stopping all the work.”

Opining that the strength at the banks cannot be increased overnight, he said Finance Ministry should make the cash available in plenty, so that these demands for currency, some rear and some genuine is tapered off.”

Well, on one hand the people are supporting the intention behind demonetization, which is to clean up the black money mayhem, while on the other hand its implications are hitting other important sectors too. (KNN)