Bank loans to MSMEs for exports drop by 40% in Gujarat because of liquidity crunch: GCCI Past President

New Delhi, July 23 (KNN) The bank credit to small businesses for exports has registered a fall of about 40 per cent in 18 months, according to a report by State Level Bankers Committee (SLBC).

According to a recent SLBC report in June 2018, Gujarat recorded export credit of Rs 6,644 crore (a drop of about about 5 per cent) compared to Rs 7,026 crore in December 2016.

However, bank loans to Micro Small and Medium Enterprises (MSMEs) for exports dropped by 40 per cent to Rs 2,031 crore.

Quoting the reason, immediate past president of Gujarat Chamber of Commerce and Industry (GCCI), Shailesh Patwari told KNN that liquidity crunch is the main reason behind this fall.

He said because of PNB scam, banks are stricter on the MSMEs.

Calling it a bad attitude on part of bankers, Patwari said that today no banks are taking care of MSMEs as they just want to play safe.

Fall in exports is not the reason behind decline in bank credit to SMEs for exports rather export business is there but in the previous six months IGST was a big issue that had aggravated the problem of working capital crunch in the hands of MSMEs.

Though the government is doing a bit to streamline the IGST refund issue but in the last six months IGST refund was a big issue which has been reflected in the SLBC report quoting decline in bank credit to MSMEs for exports.

Raising the concerns, he said we approached RBI director over this matter earlier but no respone we have received yet. RBI is silent on that.

We have also written to Prime Minister raising the issues related to banks negative behavior in offering loans to MSMEs and he directed that this shouldn’t happened, even though it’s happening, he added.

Private Banks are also not coming in front as they want public sector banks businesses to collapse so that they can get the business, Patwari opined.