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Banks asked not to insist on collateral security

The Sub Committee meeting of the State Level Bankers’ Committee of MSME and Skill Development held under the Chairmanship of…

Banks asked not to insist on collateral security

Representational Image (Photo: Facebook)

The Sub Committee meeting of the State Level Bankers’ Committee of MSME and Skill Development held under the Chairmanship of L N Gupta, Additional chief secretary, called upon bankers not to ask for collateral security in the case of loans up to Rs.10 lakh in the MSE Sector.

The sub committee noted that RBI has also suggested lending up to Rs 25 lakh without collateral security may be given to MSME units with good track record and sound financial position. Banks were further told to follow the guidelines of Govt. of India for not to insist upon collateral security for the loans up to Rs.2 crore covered under Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE). A review revealed that up to 15 January, 1,709 units have been disbursed with margin money (subsidy) of Rs.38.89 crore under PMEGP Programme.

The Sub Committee advised the banks to expedite disbursement of assistance in respect of already sanctioned cases and decide the pending applications latest by 15th February, 2018. Further banks were requested to advise each of their branches to consider sanction of at least 3 to 5 PMEGP cases with a view to maximize achievement under programme.

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The Sub Committee also reviewed the progress of declaration of MSME specialized branches by different banks. So far 230 bank branches have been declared MSME Specialized Branches for the purpose of giving advance to MSMEs. The banks, which have yet to declare MSME specialised branches for all the districts, were asked to do so by 31st January, 2018.

As regards, MUDRA, the Convenor, SLBC informed the Sub Committee that the loans of Rs.7436 crore have been disbursed to 25.24 lakh beneficiaries during the current year till date. The Sub Committee asked the banks to sanction more loans under Kishore and Tarun category.

The Sub Committee also asked the bankers to regularly hold the meeting of the Stress Committees to consider the cases of potentially viable sick units for their revival and rehabilitation instead of resorting to recovery. It was found that only 13 banks have conducted Stress Committee meetings.

The remaining banks were asked to hold Stress Committee meetings early. Banks were advised to proactively finance Clusters, Startups and ventures promoted by skilled youth. The meeting, was attended by the DGM, MSME, SBI, Convenor, SLBC, UCO Bank, Director of Industries, Odisha, representative of RBI, all the General Managers of DICs and Controllers
of different Banks.

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