The Finance Ministry must ensure effective implementation of Credit Guarantee Scheme for Subordinate Debt (CGSSD) by banks for rehabilitating industrial units that had turned into non-performing assets (NPA), said Tamil Nadu Boilers Association.
Submitting a petition in person to Finance Minister Nirmala Seetharaman, Rajappa Rajkumar, its Treasurer, cited the instance of a member unit turning into NPA during 2018 due to technical glitches in filing GST returns. The GST council had addressed the grievance filed by the association during September 2017 on May 14, 2020. The GST status was live after the industrial unit filed returns during September 2020.
Since the member unit was working for public sector undertakings such as BHEL and BEML, it could not continue business without filing GST returns, and payments also could not be processed. Once the account was declared NPA, it was frozen and transactions were stopped.
GST was automatically blocked due to non-filing of monthly returns, and e-way bill was made mandatory for any transaction valued at more than ₹50,000. The bank did not consider the request of the industry to operate the Current Account. To run the unit, another proprietorship firm was started in the name of a partner’s spouse on the same premises.
The sub-debt scheme announced by the government for NPA units was thought of to be a blessing in disguise. But, when the bank was approached for restructuring under CGSSD, the proposal got rejected as the firm was being run under the new name.
The bank has given time till March 31 to initiate proceedings under SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, Mr. Rajappa Rajkumar said, pointing out that the purpose of the CGSSD scheme was entirely defeated.
