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Telangana govt looks to cure sick MSMEs in a big way
Telangana Industrial Health Clinic (TIHC), an initiative of the State government to resolve the problem of industrial sickness in MSME space, will adopt an old industrial estate and bring at least 50 sick units back on track this year. It’ll offer financial products such as rediscounting facility and soft loans.
Hyderabad: Telangana Industrial Health Clinic (TIHC), an initiative of the State government to resolve the problem of industrial sickness in MSME space, will adopt an old industrial estate and bring at least 50 sick units back on track this year. It’ll offer financial products such as rediscounting facility and soft loans.
We’ll enter MoUs with Sidbi, SBI, Andhra Bank, Canara Bank and Karur Vysya Bank initially. We’ll offer financial products including rediscounting facility and bridge finance to sick MSME units, said to Dr B Yerram Raju, advisor to TIHC
The industrial health clinic will team up with banks by entering MoUs to extend credit advances on bills discounted and revising credit cycle, according to Dr B Yerram Raju, advisor to TIHC. TIHC will initially conduct a techno economic valuation study (TEV) on sick units that approach it for support, before taking a decision.
Speaking to The Hans India, Dr Raju said: “First of all, we have to ensure that sick unit’s entrepreneur is not a willful defaulter. Then we’ll approach banks with a revival plan.
We’ll convince banks with our TEV study to ease credit cycle and revise loan repayment options. We have decided to adopt an industrial estate in and around Hyderabad. We have set a target of rehabilitating 50 sick units in the industrial estate this year. Then we’ll replicate the revival formula for other sick units in the State.”
TIHC will act as a NBFC, for which it’s expecting RBI approval next month, to extend bridge loans and advance credit facility on bills of exchange. Telangana government has contributed Rs10 crore to the Rs100-cr corpus fund, while rest would be funded by banks and financial institutions (FIs). “We’ll enter MoUs with Sidbi, SBI, Andhra Bank, Canara Bank and Karur Vysya Bank initially. We’ll offer financial products including rediscounting facility and bridge finance to sick MSME units.
We provide upto Rs 5 lakh to MSMEs by rediscounting bills for interest payment on loans to banks. Soft loans for repaying term-loans to banks and this will enable sick MSMEs to implement revival package. Banks will recover our soft loans along with their term-loans from entrepreneurs in the course of time as the business activity picks up.”
M Sanjaya, CEO of TIHC and former GM at RBI, said: “The Centre will support us with Rs50-cr grant-in-aid. DIPP has given its in-principle approval. We’ll also select 10 entities, which want to go public. We’ll invest up to Rs50lakh in them and exit at an appropriate time after listing.”
Majority of micro, small and medium enterprises (MSMEs) are facing problems from banks owing to Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Sarfaesi notices have become a nightmare for small entrepreneurs.
Aruna Kumari, managing partner of Sri Harita Industries, which supplies electric control panels to organisations such as Isro, said: “Without any show-cause notice, my bank suddenly informed us that it would sell property of my unit using Sarfaesi Act. TIHC made a TEV study and arranged bridge loans that ensured continuous functioning of the unit.”
By Sreenivasa Rao Dasari
