Banks play a key role in financing MSMEs

Tirupati: The MSME expo and the interaction of bankers at the buyer-seller meet have helped many MSMEs to get an insight into the options available to them to obtain financial assistance from banks. This could even help the small traders as the banks are willing to give loans without collateral guarantee, particularly for manufacturing units. During their interaction with the entrepreneurs, the banker said they look at MSMEs as a growth engine for the country's economy. This meet was organised by MSME Development & Facilitation Office of GOI, Visakhapatnam.

SBI, Canara bank and Bank of Baroda have opened their stalls at the event. AGM of SME wing in SBI, Tirupati, A Murali told Hans India that the banks have been processing the eligible applications quickly and providing loans. SBI has so far provided Rs 17,856 crore to MSMEs in AP, while in the three districts – Tirupati, Chittoor and Nellore -- an amount of Rs 2,042 crore have been financed.

To cater to the needs of MSMEs quickly, SBI is having six SME intensive branches in Tirupati region and the relationship managers deal with 30-40 MSME industries to facilitate their requirements. They have been extending financial assistance more to rice mills, shrimp processing units, granite units, fruit pulp factories, etc, in the three districts besides supporting various dealerships.

When asked about the collateral security, the AGM said that they found several units facing difficulties in providing this. To overcome this, finances are being provided up to Rs 2 crore under the Credit Guarantee Fund Trust for micro and small enterprises (CGTMSE) of the Central government. However, the units must pay the premium under this. For manufacturing units, loans are being provided without collateral security, he added.

To help the small businessmen, pre-approved business loans (PABL) up to Rs 20 lakh are being offered based on their current account turnover. Banks will contact units concerned directly and offer this assistance in a paperless manner which will be of immense use to petty traders, he felt.

Official sources said the performance of banks in providing credit facilities to MSMEs was satisfactory with several branches having even crossed their yearly targets by December itself. However, some of the small traders have said that they could not approach the banks because of non-fulfilment of certain criteria within the stipulated time and were not getting loans.