SEED holds meeting with banks on Modalities on the repayment and restructuring the loans by entrepreneurs
Sikkim Entrepreneurship and Economic Development cell holds meeting with banks representatives to understand the modalities on the repayment and restructuring of the loans of the entrepreneurship who have been hit by the Covid-19 Pandemic.
The Meeting between the SEED Cell and banks was held by at Manan Kendra on July 9 the meeting was chaired by Indra Hang Limboo, Member of Lok Shaba, Sikkim. During the two hours meeting issues such as Restructure & NPAs of small loan takers were discussed with an aim to reach out to the entrepreneur hit by the Covid-19 Pandemic.
Further, the issues and topics covered during the meet were as follows
Restructure & NPAs of small loan takers
Lead Bank: Such restructuring is possible and is an ongoing activity of the banks. As per last years’ data, 2389 loans were restructured in the first wave of the pandemic. Current data will be shared with SEED cell.
Those who restructured their loans cannot avail of this facility as per RBI guidelines. Currently, banks are providing restructuring till the 30th of September, 2021.
There are other methods to help loan takes apart from restructuring.
Hon’ble MP: SEED Cell should collect data from the banks and do a year-on-year comparison. Further, a mapping of loans given and the income bracket of those who took loans has to be done. We need to see how many people have availed restructuring from the low-income bracket group and help them out.
Banks' general response: We have called/messaged all the borrowers. Those who responded, we have helped.
MD, SBS: Banks and entrepreneurs should work to get the restructuring done or any other benefit for their business. Treat banks as your friends and see towards working to a solution.
Further, diversification in business is needed.
Chief Coordinator, SEED CELL, Raj Lama: The banks are not friendly. A simple example is from the time of application to disbursement is long. We need proactivness of the banks to solve our existing crisis and extend benefits to especially low-income category loanees and make the process easy at the banks.
Banks have taken this suggestion and the banks will take the first step of creating checklist boards in their banks to meet legal and financial requirements in a transparent manner.
How many were taken by Sikkimese in Central Government Schemes?
The discussion in this was directed to Secretary, Department of Industries and Commerce in lieu of the new MSME Act to be set in Sikkim.
Hon’ble MP directed the department to take suggestions in the formulation of rules and regulations from the entrepreneurs. We don’t want an act to be passed with all rules and regulations and the entrepreneurs suffer because of difficulty in meeting criteria set by the Government. Further, he suggested that this activity has to be done pre – facto rather than post – facto.
Definition of Startup? Government of India definition v/s Sikkim and availing of benefits by Sikkimese.
Rewaj Chettri, State Co-coordinator, SEED Cell said that there is a definition of Startups done by the Government of India and because we have not implemented the Companies Act in Sikkim we are finding it difficult to attract investments, avail central Government benefits.
Hon’ble MP: When the Companies Act was passed or for the matter, any act is passed by the Government of India, state governments are asked for suggestions. Sadly, the then Member of Parliament, as well as the Government back then, did not deal with this issue, in fact, completely ignored it.
The way forward is to find a solution and this solution is slow and painstaking. However, the current Government is very serious in addressing this issue. We also want to ensure the interests of the Sikkimese people are protected as well as find a way for the entrepreneurs to get access to these benefits.
Rewaj Chettri, State Co-Ordinator SEED CELL: We will be launching a financial literacy drive specifically for businesses to make them sound in understanding various loans, schemes, and workarounds to help a business succeed and thrive.
Hon’ble MP appreciated the suggestion and directed the banks to work closely with SEED to make it broad-based and across industries, whether they be product or service-based.
P. Wangdi, MD, State Bank of Sikkim in his conclusion said encouraged the SEED cell for hosting the meet and also suggested organizing these meets frequently with a proper structure and purpose in the future
Furthermore, MD Wangdi said “Bankers and borrowers should be friends and work closely, diversification in businesses and loans availed is the need of the hour”
“We need to increase the revenue generation through businesses in a sustainable manner, agriculture and supply chain management needs to be developed and banks should help in these projects. Central schemes also support so banks should help entrepreneurs of this sector.” He added
Similarly, Gopal Lama, Lead Bank, State Bank of India mentioned that there is a trust v/s risk issue when it comes to lending “Banks should pasteboards that give out a checklist of documents for the variety of loans given by banks.” He added
Indra Hang Subba, Member of Parliament, Lok Sabha said “Partnership and collaboration of Businesses, Government and Banks are essential for the growth of the state, We need to overcome old mindsets and work towards the development of the people and the state”
Further MP Subba stressed overcoming the communications gaps between businesses, government, and banks, “A better coordination is needed between private and public banks, We need to diversify into multiple sectors and build resilience within the state” said MP Subba
In addition, he also mentioned, “Government policy-making should involve entrepreneurs. Financial literacy has to be of a higher quality and specifically targeted for businesses. This activity has to be continuous and in mission mode.”