Conflict between Small Industries and Banks in India

India's small and medium-sized business (MSMEs) industry has been affected by the lockdown. Many institutions have been shut down, many people have lost their jobs. But this sector has an important role in employment. In this context, the Government of India agreed on a special loan scheme for small and medium-sized business. But not only that project, the country's banking industry thinks that the small-sized business must be more qualified to obtain loans.

According to a report by the Economic Times, around one million out of every six small businesses in India get loans. The rest still depends on lenders, friends and family.

Bankers complain that in many cases the documents of these institutions are not correct. They are not even registered in GST. Then there are many shortcomings in the project report. Most importantly, they have no idea of their business or market.

That is why bankers think that it is important to take steps to address these deficits, not just before approving the loan. This avoids many procedural complications. However, despite this, many small and medium-sized businesses are taking loan from the government.

On the other hand, small industries claim that those who are starting new businesses may be short of paper. They also said that even if the documents of many startups are correct, it is difficult to get approval for a loan.

Recently, Sumant Rampal, Senior Executive Vice President and Chief Executive Officer of HDFC Bank of India, told that, in many cases, these small and medium-sized enterprises (SMEs) do not last long. So, it's a waste of time by thinking about the small-sized business. Its credibility is also questioned. Many cannot meet the demand. As a result, it is not possible for them to get a bank loan.