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Penal charges by banks on take-over of working capital accounts unfair: FISME

Updated: Sep 26, 2020 09:28:40am

Penal charges by banks on take-over of working capital accounts unfair: FISME

New Delhi, Sept 26 (KNN) ‘Neither will we serve you nor will any body let you serve’ seems to be the motto of Indian banks when it comes to MSME accounts.

During the COVID pandemic, when most MSMEs are reeling under cash crunch and face tremendous pressure on their working capital, penalties are imposed on them if try to change the bank.

“It is understood that whenever there is takeover of account from one bank to another there should not be any panel, additional or extra interest on outgoing fund based working capital limits. However, the private sector banks levy these charges on such transfer at varying rates” says one MSME entrepreneur who has been subjected to such charges in NCR.

According to MSMEs, Bankers view is that they have a contract for one year if MSMEs leave us before one year they pay a panel charge.

“But in practice this one year never ends as on each renewal it is again a contract of one year”, says the MSME entrepreneur.

A number of such complaints have reached the Federation of Indian Micro and Small & Medium Enterprises (FISME).

“We understand that RBI in principle would not support such practices and we would raise the issue in the forthcoming 52nd Meeting of the Empowered Committee (EC) on Micro, Small and Medium Enterprises (MSMEs) for NCT of Delhi scheduled to be held on September 28, 2020”, said FISME official.  


  1. wonderful5
    wonderful5 04/03/2024 8:51 PM

    Has there been any relief on this front? Does the stance change when the bank has withdrawn the limits pending renewal from their side and then ask for preclosure charges if refusal to sign the sanction letter after the year in question is over

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