Srinagar, Aug 18 (KNN) The Federation of Chambers of Industries Kashmir (FCIK) has requested the Reserve Bank of India (RBI) to monitor the implementation of the Credit Guarantee Fund Trust for Medium and Small Enterprises (CGTMSE), reported Greater Kashmir.

Likewise it has urged the central bank to look after the implementation of all other such schemes made available by Government of India (GOI) for smooth credit flow to MSMEs.

The chamber has complained that all these schemes were treated with contempt by Banks in the union territory of Jammu and Kashmir.

A statement issued by FCIK said that the Regional office of Reserve Bank of India (RBI) held its 59th Empowered Committee meeting on MSMEs for UT of J&K and UT of Ladakh on Thursday under the chairmanship of General Manager Sandeep Mittal which participated, among others, by representatives from departments of MSME, Industries and Commerce, SIDBI, Banks and industry stakeholders.

Former President and Member Advisory Council, Zahoor Ahmad Bhatre presented FCIK in the meeting.

While speaking in the meeting, Zahoor Ahmad Bhat regretted that while the credit flow to MSMEs by the majority of banks was low and dis-satisfactory, almost all banks denied or hesitated in sanctioning loans to start-ups and deserved MSMEs under the CGTMSE scheme.

He informed the Empowered Committee that some banks had changed the very nomenclature of the scheme by sanctioning loans up to Rs 10 lakh under it which otherwise banks ought to sanction without any requirement of collaterals or guarantors as per RBI guidelines.

He said that the scope of collateral-free financing under CGTMSE had been enhanced by GOI during the current year by modifying its ease of operations for the mutual benefit of MSMEs and banks besides placing it at par with North Eastern states.

FCIK regretted that despite the banks agreeing that there were clear instructions from GOI and RBI for sanctioning collateral-free and Guarantor-free loans to MSMEs, no bank actually implemented the scheme in letter and spirit.

The progress in funding MSMEs under other centrally sponsored schemes was also dismal which put a question mark on the contribution of banks in the massive industrialization programme launched by the Government.

The FCIK urged upon the Empowered Committee to find a fool proof structured mechanism for ensuring and monitoring smooth credit flow to MSMEs under all schemes available to their counterparts in other states.

While participating in the agenda point on Non-performing Assets (NPAs) in the MSME sector, the FCIK pleaded for a humane approach by the banks in the matter. Zahoor Bhat gave a number of reasons for the distress caused in MSMEs which included a change of marketing and procurement policy, non-implementation of the Delayed Payments Act, setback to export-oriented units during/after the pandemic and other grave issues of an unconducive atmosphere and natural calamities.

He said that instead of looking into all these problems, the banks had launched an undesired recovery drive which had harassed the concerned MSMEs and had also the potential to discourage prospective entrepreneurship in an era of growing unemployment.

FCIK has sought the intervention of RBI in devising a mechanism for restructuring loans and providing an exit policy for distressed MSMEs after taking all aspects of their failure into consideration.  (KNN Bureau)