Recession slowed down production in SME sector by 12%: SME Chamber of India

Chandrakant Salunkhe, Founder President, Small and Medium Business Development Chamber of India, while speaking with the media in Pune, said that the ongoing recession has slowed down production in the sector by 12 per cent. The latest projections by the chamber state that by the end of the current financial year, the sector will see a slowdown of 35 per cent as a combined effect of the ongoing recession and the impending elections next year.

According to figures released by the chamber, the current loan default for the sector is 4 per cent and is set to cross 6 per cent in the next few months.

There are more than 12 lakh micro, tiny and medium-scale enterprises in the country, which contribute 8.3 per cent of the national GDP. Around 65 per cent of the set-ups cater to the manufacturing sector, which have been badly hit due to the recession. More than 7 crore people find employment in the sector across the country.

"Despite being an important segment of the economy, our sector is riddled with problems. As per the studies of the chambers, 85 per cent of small- and medium-scale enterprises are deprived of loans and financial literacy and management is the need of the hour for the sector. Another issue plaguing the sector is that of the delay in payments from big companies.

In order to resolve such issues, Salunkhe suggested the formation of an independent arbitation board. "Our members do not want to got the courts, as it would ruin their relationships forever but delay in payment hampers their doing business," he said. The arbitration board suggested by Salunkhe would deal with such issues and help in resolving them.

The total business of the bank grew to Rs 3,89,005 crore up 13.58 per cent during the quarter ending September 30, 2013 from Rs 3,42,508 crore registered during the same period of previous year.

Total deposits of the bank grew to Rs 2,12,705 crore for the quarter ending September 30, 2013 up by 12.47 per cent from Rs 1,89,115 crore registered during the corresponding period of previous year, it said.

The total gross advances increased to Rs 1,76,300 crore for the quarter from Rs 1,53,393 crore registered during the corresponding period of previous year.

The net interest income of the bank for the half-year ending September 30, 2013 stood at Rs 2,768.04 crore as against Rs 2,574.47 crore registered during the same period of previous year, it said.

Gross NPA of the bank for the first half of the current fiscal (as on September 30, 2013) stood at Rs 8,202 crore with Gross NPA ratio at 4.65 per cent.

Net NPA of the bank as on September 30, 2013 stood at Rs 4,875 crore with Net NPA ratio at 2.83 per cent respectively, it said.