Srinagar, Jan 18: Federation of Chambers of Industries Kashmir (FCIK) has demanded a grant of extension in the OTS-2022 scheme launched by J&K Bank, enhancing the period for repayment and making it applicable to all MSME loans irrespective of their limit.
As per the statement, the demand was raised in a prolonged meeting between representatives of concerned entrepreneurs and the FCIK team held on Tuesday in the office premises of the apex industrial body.
The members said that it was heartening to acknowledge that for the first time, a uniform and non-discriminatory scheme was launched by J&K Bank to settle NPA accounts.
“However, it was unfortunate that the concerned enterprises could not take advantage of the scheme for many reasons including their inability to arrange resources within the prescribed time limit.”
The members informed that the enterprises of the Union Territory whose accounts had been declared NPAs should not be treated as willful defaulters as they have been victims of circumstances beyond their control.
They said that frequent business interruptions were mainly responsible for the mess in MSMEs’ asset quality as it overburdened the enterprises with idle establishment costs which drastically affected their viability and caused stress to their accounts ultimately leading these to NPAs.
They said that in the endeavour of saving stressful accounts from slipping into NPAs, the bank in the majority of cases had resorted to ever-greening for their interest of curtailing growing NPAs, which further overburdened the enterprises.
“The principal balances in NPA accounts include a substantial amount of bank interest accounted for through this mode of ever-greening” informed the members.
The members also complained about the harassment drive launched by the bank against defaulter MSMEs tarnishing their image and maligning their credibility in society without having any regard for their genuine business failures. Apart from the unconducive situation, the members counted several reasons responsible for the failure of their businesses.
Acknowledging the views of the members, the immediate past President of FCIK Muhammad Ashraf Mir assured the members to take up their issue with both the bank and the government for a meaningful resolution. He said that the time constraint in the scheme was coming in the way of its implementation as the enterprises find it almost impossible to generate 50% of the debt within 2 months.
He said it was difficult rather impossible to find buyers and realize money for the property of concerned enterprises even though one decided to generate funds through that route.
Mir said that the OTS scheme launched by the bank should have been part of a larger rehabilitation programme of the government to revive sick industrial units in the UT. The government has to explore several methods of resource generation for the enterprises enabling them to pay off their debt to J&K Bank under their OTS scheme which may also include the creation of a Special Asset Reconstruction Company.
Mir also regretted that many accounts of MSMEs in the bank had been declared NPA because their payments on account of supplies and job works were not made in time and withheld by government departments.
Mir said that if agreed by the bank, FCIK would volunteer itself to act as an intermediary between defaulting manufacturing units and the bank to pay every penny of debt back to the bank provided that the bank cooperated with the apex organisation. FCIK will be formally writing to the bank about providing a list of defaulting manufacturers to come up with a solution after consultation with them.