MSMEs in Peenya industry struggle to get loans

Micro small and medium enterprise (MSMEs) in Peenya industry are struggling to get loans under the Emergency Credit Line Guarantee Scheme (ECLGS) from the government.

State level bankers committee data shows that loans for 61 percent of eligible MSMEs in Karnataka under the ECLGS scheme have been disbursed but still 40 percent of eligible MSMEs are yet to receive the loan amount. The eligible owners of MSMEs in Peenya are struggling to get the loans from the government which forced them to move to private banks with high interest rates.

Ravi Kiran Kulkarni owner of a small scall industry shares his experience of not receiving the loan “Many MSMEs including me received loans for the first and the second time from Reserve Bank of India (RBI) but due to fund shortage we didn’t receive it the third time. This effected our business and also lead to cancellation of orders. We didn’t receive raw materials as well. Since 60 percent of my turnover were from exports and when that came to a standstill due to covid-19 I had to move to private banks with higher interest.”

Mr. Jacob Crasta Ex. President of Federation of Karnataka Chambers of Commerce and industry (FKCCI) said that 90 percent of the MSMEs in Peenya industry have no access to the loans under the ECLGS scheme. Guidelines set by the government provide loans to only MSMEs under the category of Special Mention Account (SMA)-0 and SMA-1. He feels that the loans have not reached the MSMEs which were actually in need during pandemic.

He further added by saying that “The company which got Non-Performing Assets (NPA), those who got the equated monthly instalments (EMIs) pending, those who are struggling, the companies who were not able to walk, who were in dying state, they didn’t receive the loans. During the pandemic 30 to 35 percent of MSMEs closed as they didn’t receive the payments, raw materials, nor labour. They were stuck. For such MSMEs the government did nothing and allowed them to die.”

Mr. Srinivas H.M, Additional Director of Ministry of Industry and commerce has mentioned that many other schemes apart from loan provisions have been implemented for improving the growth of MSMEs.

He further added by saying “We provide schemes like investment promotion, subsidies are there, stamp duty exemption, electronic trading platform (ETP) subsidies, Payment aggregators (PA) reimbursements, certification reimbursement. More than 18 incentives are being provided. This will help in the growth, expansion of new and existing MSMEs.”

Expansion of MSMEs is necessary for the growth of any economy. So, more focus should be given to its growth.