Recent scams and increasing NPAs are creating pressure on banking sector. At the same time, balance sheets of apparel manufacturers, especially of exporters, are not showing good indications, resulting in huge pressure on financial limits. Are you also facing the heat of liquidity… How are you managing the working capital… What is the solution to this critical problem?
Rakesh Grover, CMD, Groversons Group (Paris Beauty), Delhi
We are not facing the heat due to our strong balance sheet, but no doubt banks are more conservative and vigilant from past few months. Their outmoded approach is hurting the country’ economy as well as business opportunities for many companies, especially those that are comparatively new or don’t have strong finance. The banks have to understand that a particular firm can have good business opportunities and requires funding for the same. To support them, as well as to make own money secure, banks should have more staff to verify such firms, besides their scope for further growth, etc. rather than taking a harsh stand in not supporting them. Due to some negative experience with one client, banks should not apply the same rules for all.
Davinder Sandhu, MD, Davinder Sandhu Impex, Ludhiana
Banks are not supporting businesses at all. Their documentation system, which was fairly strong earlier also, has now become more stringent; they are taking comparatively much more time in most of the processes. Even ad hoc limits take nearly three months to get executed, and loan is something we can’t expect easily now. Banks are now stricter about rating and are going for three different rating firms to make sure of the credentials of a company, and avoid taking any risks. They are very much concerned about the limit and not increasing the same at all.
Due to change in laws in the Middle East and VAT in Dubai, buyers from these countries are not much open. Our business is mainly with these two markets, so we have seen a downfall of nearly 30 per cent in business. To put more efforts and to maintain business, we need funding, but banks are not that cooperative. This is one more disadvantage for us. I strongly feel that despite best efforts by individuals like us or even industry associations, we can’t do anything on this issue. The Central Government should take some immediate steps in this regard as banks can’t do anything without Government instructions.
The banks and the country has now only one benefit in this entire changed system. Companies which were working ‘unethically’ do not have any other option as banks check their billing. There is neither scope for over-invoicing, nor getting funds, or any leverage.
Vivek Lakra, Director, Superfine Knitters, Ludhiana
Due to poor management, and poor governance in public sector, unethical businessmen have taken those (PSU banks) for a ride by defaulting on repayments. Apparel business is one business which requires huge money as it is capital and labour intensive and has longer rotation cycle. PSU banks are not lending money; and even private banks are not taking stressed assets. We are definitely facing the heat, and somehow managing and waiting for good days to come.
Rajendra Bhatia, MD, India Today Fashions, Jaipur
Yes, banks are becoming more difficult, and garment exporters are facing a hard time now.
But there is totally no support from Government of any kind. Forget about support, till date there is not even a single rupee credit of so-called GST return in most of the exporter’s account. These exporters are facing hurdles in working capital.
Now the bankers are also not as liberal as they used to be before. Since we are facing tough price competition from China, Vietnam and other neighbouring countries, most of the exporters are focusing on domestic business. Frankly, exporters can’t survive without Government’s support in the form of incentives, like before.
Raj Kumar Sethia, MD, High Street Fashions, Jaipur
I have not seen any kind of issue with our bank – it may be due to our strong financial standing, good and longterm professional relations with them. We always follow systems and work accordingly, and never ever delay any payment. Even banks are ready to give us loan but we put our expansion plan on hold for some time. Even in my business circle, I have not heard of bigger companies than ours, or of similar size facing any such issue.
Manoj Tulsani, Director, Red Square Enterprises (BTW), Ulhasnagar
Banks are under pressure right from demonetisation, and now that they have money with them, their problems have increased. As an organisation, we are not much dependent on the banks, so we have not seen any major issue.
Our business is doing just reasonably okay and there
is no such requirement of funding. But I would like to add that the credit period has now been increased by more than 50 per cent, so that is a reason for worry and banks can help SMEs on this front.
Vakil Ahmad, Director, Silk Fashion Creator, Varanasi
We are facing time-line issues with the banks as they take much time in daily transactions. We have not asked for loan in recent months in spite of our business passing through difficult phase, besides we are not expanding either. But in our circle, we heard that rather than denying, banks are taking a longer time in loan process. So, the firms which are looking for loan, skip their efforts to get the same from banks. On the other hand, there are firms which are not doing well but getting enough support from banks…, What is the reason for that is for speculation! All in all, attitude of banks has changed and there is no solution for this situation.
Ramesh Verma, President, Handloom Exports Manufacturers Association, Panipat
Banks are forced to be strict as per the instruction from RBI and Government regulations, but we have not seen much problem so far. After all banks are doing business and they have to be supportive like any other business or public dealing, otherwise it is hard to grow for them. Please note that still we are waiting for
GST refunds and are already facing a lot of difficulties on this front. Despite being a good policy step, GST has become a ‘nightmare’ for us, thanks to officials who are not supporting us at all. They are coordinating with CAs and things are not moving at all.