Bank lending to small and micro units is pathetic, in Goa, said Mr Jaikish, general manager, RBI-Goa, pointing out that they are far below the 30 per cent limit of the total credit extended to the Medium Small and Micro Enterprises (MSMEs).
Addressing a meeting of bankers and members of industry organised by Credit Rating and Research Limited (CARE) a rating agency, Mr Jaikish said that SMEs are unsuccessful in availing of bank finance because they have difficulties in presenting their project to bankers and also because they do not draw up their financials properly.
To ease the situation, bankers need to act as facilitators while processing loan applications, the RBI general manager said. He added that bankers should also educate their MSME customers on the advantages of getting rated from a professional agency because there are “several advantages of it.” One of the advantages of a client getting rated is lower interest charged and also easing of collateral norms.
Quoting a study on MSME bank finance, Mr Jaikish said that although there was a tremendous improvement in the funds extended to small units, the benefits are not reaching everybody. As such, the credit problems of a SME is related to lack of timely finance, high cost of funds, collateral requirement and absence of suitable mechanism for identifying sickness.
Mr Jaikish explained that with mining at a standstill, bankers in the state have to think of ways and means on opportunities and therefore will have to turn towards the MSME sector.
Speaking at the occasion, Mr Mehul Pandey, regional head CARE, said as per experience, small units that get themselves rated benefit from inculcating financial discipline. The main problem with SME entrepreneurs is that they tend to outsource a critical function of finance to outsider who probably does not advise them properly.
Touching upon Goa’s low CD ratio of 28 per cent as against the all India CD ratio of 78 per cent, Mr Mehul said that it was typical to economies that are excessively dependent on tourism. Moreover the mining shutdown has also added to the problem.
Mr Avinash Chandra, zonal manager, Maharashtra and Goa, CARE, said that although industry is low in Goa, interest in getting rated is slowly picking up with about 30 local companies in the company client list. [NT]