Bengaluru, 22 Nov (KNN) Karnataka Small Scale Industries Association (KASSIA) has welcomed Prime Minister, Narendra Modi’s clarion call to bankers to do away with the conventional approach towards lending for MSMEs and see the lender-borrower relationship as a partnership.

However, the Karnataka based association has pointed out that this change can only come into effect if the Finance Ministry reforms the accountability norms that dangle like a Damocles sword over the banker’s head, said the release.

KASSIA has observed that many branch managers and executives are reluctant to lend because they will be held accountable and punitive action taken on them if the loan goes bad and the account turns into NPA.

“There has to be a clear discrimination between wilful default and genuine cases where the borrower fails to pay due to genuine business loss, and in latter cases, the bankers sanctioning the loan should not be penalised,” said the official release of KASSIA.

It also said that the Prime Minister’s directive to the banks can work at the ground level only if it is accompanied by relaxing the present accountability norms in the banks and thus allaying their fears, suggested KASSIA.