‘Banks should influence big companies to clear dues of SMEs’ | SupportBiz


‘Banks should influence big companies to clear dues of SMEs’

Uma Shankar, Regional Director, Reserve Bank of India (RBI) feels that, the banks can come to rescue the small and medium enterprises (SMEs), who do not receive payment on time from the big companies they deal with, reports Business Line.

The RBI director was addressing the ‘SME CEO Knowledge Forum,’ co-sponsored by UTI Mutual Fund, The Hindu Business Line and SIDBI, along with KPMG as knowledge partners in Bangalore.

Uma Shankar said that, most SMEs are a one-man-show who lack both manpower and strength to demand on time payments from the bigger players, which can be resolved if the banks exert their influence and ask the biggies to release the dues. “It is here the banks should step in to help them for their survival,” she said.

Talking about the struggles that the SMEs face, Shankar said that institutions like SIDBI (Small Industries Development Bank of India) are continuously working to help the SME units with appropriate knowledge transfer on issues related to marketing, financial statements, policies, technology etc. Commercial banks too have been specifically instructed to set aside some portion of lending to the SMEs.  

On the other hand, she advised the SMEs to strictly maintain quality and deadline in their production and follow ICAI norms while preparing financial statements. She also stressed on sticking to the repayment schedule after receiving financial assistance.

Ram Nath, Chief General Manager, SIDBI suggested the SMEs to ask for competitive rates instead of subsidies.

While Bharath L. Ghia, Country Head, SME & Distribution Channel of UTI Mutual Fund opined that, SMEs should invest in mutual funds, B.P. Shashidar, President of Kassia (Karnataka Small Scale Industries Association) said the SMEs can expect challenges in running their business. Giving the example of his own experience in operating a small unit, Shashidar said, “It is a mix of risk, tension, pressure, anxiety, progress, thrill and satisfaction too as they contribute to the society at large.”