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The Hindu
08-07-2025
- Business
- The Hindu
Increasing number of MSMEs in Coimbatore turn to money lenders and NBFCs for loans
The rising number of industries in Coimbatore district turning to money lenders in the unorganised sector and the Non-Banking Financial Companies (NBFCs) is a matter of concern, say industry owners and officials. 'We have raised this issue at the bankers' meeting. The Micro, Small and Medium-scale Enterprises (MSMEs), especially the micro and cottage enterprises, find it difficult to comply with the CIBIL score norm. These norms should be relaxed. Further, banks take time to sanction funds. These issues should be addressed,' said an official in Coimbatore. According to J. James, president of the Tamil Nadu Association of Cottage and Tiny Enterprises (TACT), while 30 % of the micro units take loans from nationalised banks, another 30 % get it from private banks. The remaining units go to NBFCs. If the unit is unable to repay on time, they run into serious issues and we are unable to help them,' he said. It is difficult for the micro units that do not work on job orders to maintain records. Hence, they are unable to comply with the CIBIL norms, he said. President of the Coimbatore Tiruppur District Cottage and Micro Enterprises' Association C. Sivakumar said the industries do not have to submit collaterals when they take loans from NBFCs. Further, the loans are sanctioned within a day. In the case of banks, it takes at least a month. However, the units pay 20 % to 28 % interest. 'It is not possible for any MSME unit to operate the unit after paying such high interests for loans. So, they start failing to pay the interest and get into trouble. There are several instances where the money lenders or NBFCs have take possession of the assets of the units that have failed to repay,' he said. Further, there are several middlemen who promise loans, taking over of default loans, etc and push the micro units into deeper troubles, he added. The banks need to be pro-active and support the micro industries more by relaxing the loan norms, they added.
The Hindu
29-04-2025
- Business
- The Hindu
Credit off take by MSMEs in Coimbatore reduces
With several industrial sectors facing a slowdown of orders for almost a year now, credit offtake by the Micro, Small and Medium-scale Enterprises (MSMEs) in the manufacturing sector seems to be shrinking. 'An industry will need funds either for expansion or for a new venture. It is a widespread belief that in the last one year, MSMEs are reluctant to invest,' said M. Karthikeyan, president of the Coimbatore District Small Industries Association. 'We are talking about components and spares coming to Coimbatore in huge quantities from Gujarat as the MSMEs in Tamil Nadu, especially Coimbatore, are losing their cost competitiveness. If the current demand trend continues, more MSMEs in Coimbatore will go out of business,' added C. Sivakumar, president of the Coimbatore Tiruppur District Tiny and Micro Enterprises Association. Industries faced a slight drop in business in 2023-24. Instead of a revival, the situation worsened last fiscal. This year, demand is dull in the first month and there is no sign of a orders picking up. So, MSMEs do not want to invest in such a scenario, said Mr. Sivakumar. Offtake of bank loans in Coimbatore by MSMEs was nearly ₹35,500 crore in 2024-25. Even in February this year, the offtake was slow and several industry associations organised loan melas. The interest rate offered by the lenders in the non-banking financial sector (NBFCs) is competitive now for machinery purchase too and many MSMEs are moving to the NBFCs for loans, said Mr. Karthikeyan. The Potential Linked Credit Plan for 2025-26 envisages almost the same disbursement as last year by the banks for MSMEs. Coimbatore District Collector Pavankumar G. Giriyappanavar said the annual credit plan for Coimbatore for the current financial year would be released in the second week of May. Industry leaders say Coimbatore MSMEs require focused support packages to help them revive.
