National( MSME) Borrowers’ Association

National( MSME) Borrowers’ Association
101 Gundecha Chambers
Nagindas Master Road, Fort, Mumbai.
2nd November 2024

Press Release

National MSME Borrowers Association conducted a press conference today at press club to bring to the public domain the failure of the authorities, particularly the RBI and the Banks and financial institutions to give effect to the notification dated 29.5.2015 under the MSMED Act.

The MSMED Act and the notification was enacted taking note of the fact that MSMEs constitute to be the backbone of the Indian economy particularly, generation of employment, creation of wealth and equitable distribution of wealth.

The MSMEs, which today includes trading and the service sectors, involves the lives and livelihoods of millions of Indian families. These small time entrepreneurs face great difficulty to avail credit facilities even from nationalised banks. The Government of India, keeping in mind that this vital priority sector should not perish but grow robustly, made it mandatory that banks and financial institutions shall reach out to them and and extend credit facilities even without collateral securities. Likewise, those who purchase goods from MSMEs and fail to pay them on time are mandated to pay interest at three times the bank rate. The monies due to MSMEs can be recovered as though a public debt through revenue recovery proceedings.

But all this is only on paper. The notification dated 29.5.2015 prohibits the bank from classifying the account of an MSME as NPA and initiating recovery steps without the constitution of a committee for the resolution of stress. However, not even a single bank or financial institution including the SBI has ever constituted a committee or made an attempt towards the resolution of stress. For the last almost 10 years, recovery action is being initiated throwing the notification to the bin. Thousands of MSMEs were brought to total ruin, forceful possession being taken of their establishments , factories and homes. MSMEs when they knock the doors of the courts, namely, the NCLT, DRT, High Court and Supreme Court, relief is declined for reasons difficult to be fathomed.

MSMEs constitute to be 90 percent of the entrepreneurs in this country. If the benefit of the notification were to be extended, there won’t be much room for recovery action. This adversely affects the vested interests of many, particularly ARCs and those who have become billionaires overnight by acquiring the properties of the MSMEs by crafty means. The gross failure on the part of the RBI, the regulator, to implement the notification, so too, even of the board of directors of nationalised banks to constitute a committee, to throw the notification entirely to the bin, cannot be an innocent failure.

Mr. Mathews J. Nedumpara, the lawyer for the MSMEs was the main speaker. Adv. Nedumpara has relentlessly fought for the rights of the MSMEs and obtained a judgement in their favour from the Supreme Court (Pro knit v board of directors of Canara Bank) holding that the notification is mandatory. Despite the Supreme Court’s authoritative pronouncement, the MSMEs still face threat of dispossession from their homes and enterprises because of reluctance to give effect to judgment of the Supreme Court for it benefits the ARCs and those who do business in buying the assets of MSMEs in stress.

The office bearers of the association added that they would be conducting a nationwide campaign for bringing to the domain of the public at large the injustice caused to the MSMEs, the violation of their rights and the need for MSMEs to be informed of their rights, be vigilant, unite and fight.

Dr. Krishnan promoter Vysali Pharmaceuticals, President Ltd (Kerala chapter), Mr. Vidhya Prakash Styleman Textiles Ltd, General Secretary and Mr. Abraham Kuruvilla SARK Spices Ltd, spoke of the their own experience of the injustice metted out to MSMEs.

Adv Chittoor Rajamannar also spoke.

Manisha Mehta, CA
President, National MSME Borrowers Association.

SHARE THIS :

Disclaimer:


The Bar Council of India does not permit advertisement or solicitation by advocates in any form or manner. By accessing this website you acknowledge and confirm that you are seeking information relating to our firm of your own accord and that there has been no form of solicitation or advertisement by us. The contents of this website is intended purely for educational and informational purposes and should not be construed as soliciting, advertisement or as legal advice.


The contents of this website are the intellectual property of Nedumpara & Nedumpara. No material on this site may be copied, reproduced, republished, uploaded, posted, transmitted or distributed in any way without the prior written permission of Nedumpara & Nedumpara.