Banks have agreed to extend financial help to small and medium enterprises (SME) and exporters in the wake of tight liquidity conditions, following the international credit crunch. The Indian Banks Association (IBA) discussed the problems of SMEs and hinted to increase the credit limit and ease loan repayment norms without any penalty.
The SMEs and export organizations demanded increase in lending limit from Rs 75 crore against stocks to Rs 100 crore and up to Rs 85 crore against the inventory. The members of SMEs said that the customers are not repaying them as per stipulated conditions and hence the repayments are getting delayed.
SMEs are also facing low demand from the national and international markets due to the global slowdown, causing increase in inventory. They demanded interest subsidy, relaxation in classification norms for non-performing asset, besides rescheduling overdue loans. They also asked for increasing the time limit for treating a loan non-performing, from 90 to 180 days.
Chairman of IBA and managing director of Bank of India said that the demands of exporters and SMEs can be resolved at lower level and there is no need for any regulatory change. The banks would also bring the matter in the notice of the government and RBI for its early disposal. Meanwhile, the Reserve Bank is likely to announce measure to help SMEs as per indication by Union small scale sector secretary, Dinesh Rai.
*source-TopNews – Noida,Uttar Pradesh,India