Micro and small-scale industries in Coimbatore urge RBI to stop reducing CIBIL score over slight delay in loan repayment

Coimbatore: Micro and small-scale industrial units in the district have urged the Reserve Bank of India to stop banks from reducing CIBIL score for even one-day delay in loan repayments, stating prolonged financial stress over the past six years has pushed many small businesses into crisis.The issue was raised during a district executive committee meeting of Tamil Nadu Cottage and Tiny Industries Association (TACT) on Monday. J James, district president, TACT, said industries such as welding workshops, laser cutting units and fabrication firms were severely affected by the acute shortage of LPG cylinders used for industrial purposes for the past two months. "While an industrial LPG cylinder costs only around Rs 1,950, it is being sold in the black market for as high as Rs7,000, forcing many job-order units to suspend operations," he said. James said banks were reducing CIBIL score for just a day delay in loan repayments, worsening the financial burden on MSMEs already struggling due to rising raw material costs, GST issues and the ongoing global crisis. M Raveendran, president, Coimbatore Compressor Industries Association, said the prices of copper, aluminium and steel had risen by 80%, 60% and 30%, respectively, and polymer and plastic raw material costs have surged by 100% in the past six months owing to the West Asian crisis. He urged RBI to permit an interim working capital limit increase of up to 20%, on the lines of Emergency Credit Line Guarantee Scheme introduced during the Covid-19 pandemic. He also sought easing annual loan renewal norms, and proposed a three-year cycle for limits up to Rs1 crore, and extending NPA classification period from 90 days to six months. Other demands included fair transmission of repo rate cuts and waiver of charges for loan transfers between banks.
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