Coimbatore: A day after Canara Bank distributed loans to micro units that have only current account with the bank, industrialists on Saturday urged other banks to provide loans as several micro units are in desperate need of assistance.
Canara Bank had distributed Rs 5 lakh each to three micro units and Rs 50,000 each to four units, without any collateral, under the Pradhan Mantri Mudra Yojana..
But other banks are hesitant to provide loans to micro units even after the recommendation of the district collector and district industries centre (DIC), said J James, district president of the Tamil Nadu Association of Cottage and Tiny Enterprises. “We assume it is because the units, especially those who do job works for bigger companies, could not show large turnover. But the government has given banks assurance on our behalf and they can collect their money back by claiming insurance if the units fail to repay,” he said.
During the pandemic situation, the central government had announced that 20% additional loan with 6.5 to 7% interest will be provided to the industries, the official said. “Subsequently, we submitted 410 applications seeking loans. But we don’t know the status of 80% of the applications. We received no response even after several representations. Loans were given only to those units that had already obtained loan from that bank.”
Without financial support from banks, the units are obtaining loan from private moneylenders who charges about Rs 3 to Rs 10 for every Rs 100 loan, James said. “Whatever we earn is used to pay the interest.”