Amethi, Oct 17 (KNN) The micro, small and medium enterprises (MSMEs) in the district are on the verge of closure and their revival seems to be a big challenge due to non-cooperation by the crucial power department and banks.

The MSME units under the Faizabad district are in dire need of working capital and have been served recovery/auction notice by the banks.

“The MSMEs in the area are facing huge financial crunch due high cost of raw materials and high cost of credit,” Shahnawaz Ahamad, Chairman, IIA Amethi Chapter, told KNN.

He said, “RBI recently held a meeting with the banks in Lucknow during which it strictly directed the banks to make measures to revive the sick units.”

Pointing the experience of local MSMEs with three banks, he said, “Punjab National Bank and Bank of Baroda took the matter up after the meeting. While PNB is taking initiatives to help the industry, Allahabad Bank is not ready to help us in any way.”

“Bank of Baroda, on one hand talks about reviving the sick MSMEs, on the other hand it is publishing auction notices of the sick units,” he added.

KNN also spoke to Usha Singh, a plastic unit holder in the region, who has been served the notice by Bank of Baroda.

Explaining her case, Singh said, “I had a working capital loan of Rs 24 lakh from the bank, out of which it only released Rs 10 lakh and stopped the release of remaining Rs 14 lakhs. Citing several reasons, the bank said the amount cannot be released until the overdues amount is paid. I told personal loan from some people and paid the overdue. Even after that the working capital was not released.”

“In December last year my unit was declared sick. The District Industries Commission directed us to send proposal for revival to the banks. My proposal was rejected by the Bank of Baroda. After that the Commissioner forwarded the case to Udyog Bandhu, Lucknow. We were under assumption that the case is on stay, but suddenly in October 5, 2016, we saw an auction notice for November 15, 2016 of our unit published in the newspaper,” Singh said.

The district industries centre took up the matter of revival of sick units with the UP Government and RBI after which the talks initiated, said Ahmad.

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.

Pointing another crucial issue with the UPPCL, Ahmad said, “An advisory was issued by the Udyog Bandhu to UPPCL to extend support to sick MSME units in Faizabad district in order to revive them. However, no steps were taken by them to help the industry.”

After the MSME Ministry had last year notified the Framework for Revival and Rehabilitation of Sick Units, 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.

The MSME units in the district have been taking up the issues with the state government, Congress VP Rahul Gandhi and MSME Ministry. However, the end to their problems seems to be an unachievable target. (KNN Bureau)