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Large number of MSMEs turn to banks for unsecured loans: survey

NEW DELHI : A large number of businessmen in the MSME sector have approached banks for unsecured loans to overcome the crisis following the coronavirus epidemic, according to a Care Ratings survey.

According to the survey, nearly 70 percent of those surveyed have contacted banks for unsecured and government-guaranteed loans, and the majority of them intend to borrow less than ??1 crore.

He further revealed that banks have so far authorized loans to around a third of applicants and the cost of borrowing is 8-9% for most borrowers.

The rating agency said the survey was conducted over 2 weeks – between June 23 and July 7 – and saw the participation of 345 respondents from a representative sample of industries.

Respondents’ business size in terms of turnover varied from less than ??25 crores to ??100 crores.

“The majority of respondents (more than half) have benefited from a moratorium with banks while fewer (27% of those to which it applies) were able to do so with NBFC,” said the survey, adding that the foreclosure severely affected the bulk of respondents (over 60 percent).

He also revealed that declining demand, contraction in cash flow, finance, labor shortage, logistical constraints and increasing receivables are among the main challenges facing the segment in reason for locking.

One-third of those polled have suffered income losses of more than 50 percent in the past three months.

In addition, more than 60 percent of them have not been able to pay the full salaries of their staff. However, only a quarter of those polled have laid off their staff, he added.

In addition, almost half of those surveyed believe that they could benefit from the change in the definition of MSMEs and a large proportion plan to increase their size.

The study further indicates that prevailing anti-Chinese sentiments have not resulted in any noticeable changes in terms of new business.

In terms of assistance, the survey indicates that MSMEs seek interest exemptions, extension of the moratorium, loan restructuring, tax cuts, financial support from banks and government, direct transfers from money, a reduction in electricity and water costs, among others.

According to the study, around 65% of participants expect their business to take 12 months or more to return to normal, and almost half of those surveyed expect their business situation to improve in the future. over the next 6 months.

This story was posted from an agency feed with no text editing.

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