Indian Bank unveils MSME Prerana in Telangana

Banks must assess viability of defaulting MSMEs before taking action, suggests Minister

Telangana Industries and IT Minister K.T.Rama Rao on Tuesday appealed to banks not to invoke provisions of the SARFAESI Act, 2002, against micro, small and medium enterprises defaulting on loan repayments without assessing viability of the businesses. Seeking to highlight the significance of banks differentiating between large industrial and MSME borrowers, he said use of the Act even in case of one or two defaults by the latter led to closure of the enterprises and industrial sickness. Ahead of initiating action, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the banks should undertake a techno-economic viability study of the units, he said. Public sector banks can stand out by adopting such an approach and instil confidence among micro and small entrepreneurs, Mr. Rama Rao said, referring to the Telangana Industrial Health Clinic initiative of the State government to address incipient sickness in MSMEs.