Q-and-A

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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.

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