Sick units can be revived if easy loans given against property: Maharashtra Chamber
Updated: Jul 07, 2014 05:03:41pm
New Delhi, Jul 7 (KNN) If sick units in MSME sector are allowed long-term loan against their properties instead of their disposal at throw away prices, at least 80 per cent of the sick firms can get working capital and can be nursed back to health.
President of Maharashtra Chamber of Commerce, Mohan Dev said, “It’s really nice that the SMEs get loans up to rupees one crore without any collateral fees. But if any unit worth Rs 1.5 crore turns sick, the bank sells it at Rs 20 lakh only. The buyer gets the Rs 1.5 crore worth property in negligible price and remaining 80 per cent of the banks money is given by the government to the bank under the Credit Guarantee Fund Trust (CGFT) guarantee.”
“The bank’s 100 per cent money is recovered in this way and CGFT gets money from the Central Government under purchaser’s benefit,” he added.
The CGFT ensures availability of bank credit without collaterals or third party guarantees to the first generation entrepreneurs to set up their unit.
The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80/ 85 per cent of the credit facility.
He said this while giving a presentation before the MSME Minister Kalraj Mishra here last week. Mishra held a meeting with representatives of MSME associations to discuss various issues concerning the sector that has been working as locomotive for the economy. MSME Secretary Madhav Lal and DC-MSME Amarendra Sinha were also present at the meeting.
Dev said the rehabilitation under the BIFR (Board for Industrial and Financial Reconstruction) route is available only for the big corporates. “When big guys get notices for recovery from Debt Recovery Tribunal, they rush and register themselves with the BIFR providing themselves a safe haven at least for 10 years. On the contrary, our units are sold within hours and days. You (Banks/DRTs) sell the units running for 25 years in 60 days…”
He made an appeal to the Minister seeking a rehabilitation mechanism for the small units.
As per functioning of SIDBI, he said that if the units which are running for 10-20 years are suddenly faced with the cash crunch, SIDBI should give loan up to 50 per cent value of the property of the unit.
In several areas where industries have gone sick, lands have been sold by DRTs giving way to hotels and showrooms. He cited examples of Nashik, where hotels have come up in place of manufacturing units. (KNN/SD)
President of Maharashtra Chamber of Commerce, Mohan Dev said, “It’s really nice that the SMEs get loans up to rupees one crore without any collateral fees. But if any unit worth Rs 1.5 crore turns sick, the bank sells it at Rs 20 lakh only. The buyer gets the Rs 1.5 crore worth property in negligible price and remaining 80 per cent of the banks money is given by the government to the bank under the Credit Guarantee Fund Trust (CGFT) guarantee.”
“The bank’s 100 per cent money is recovered in this way and CGFT gets money from the Central Government under purchaser’s benefit,” he added.
The CGFT ensures availability of bank credit without collaterals or third party guarantees to the first generation entrepreneurs to set up their unit.
The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80/ 85 per cent of the credit facility.
He said this while giving a presentation before the MSME Minister Kalraj Mishra here last week. Mishra held a meeting with representatives of MSME associations to discuss various issues concerning the sector that has been working as locomotive for the economy. MSME Secretary Madhav Lal and DC-MSME Amarendra Sinha were also present at the meeting.
Dev said the rehabilitation under the BIFR (Board for Industrial and Financial Reconstruction) route is available only for the big corporates. “When big guys get notices for recovery from Debt Recovery Tribunal, they rush and register themselves with the BIFR providing themselves a safe haven at least for 10 years. On the contrary, our units are sold within hours and days. You (Banks/DRTs) sell the units running for 25 years in 60 days…”
He made an appeal to the Minister seeking a rehabilitation mechanism for the small units.
As per functioning of SIDBI, he said that if the units which are running for 10-20 years are suddenly faced with the cash crunch, SIDBI should give loan up to 50 per cent value of the property of the unit.
In several areas where industries have gone sick, lands have been sold by DRTs giving way to hotels and showrooms. He cited examples of Nashik, where hotels have come up in place of manufacturing units. (KNN/SD)
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