Banks asked to provide credit to power starved firms

Commercial banks received a direction from the Reserve Bank of India (RBI) to provide credit to companies in Andhra Pradesh which are suffering from paucity of power.

Earlier, the Visakhapatnam Chamber of Commerce and Industry discussed the problems being faced by the business in the state owing to non-availability and shortage of power with the Union Ministry of Commerce and Industry. The ministry in turn made a request to RBI to direct banks to provide credit to the affected companies.

Many companies in the state suffered a fall in production because of power cuts resulting in relatively lower business turnover.

A lower turnover for a business entity adversely impacts the availability of credit as banks tend to be more cautious while sanctioning loans.

The RBI advised banks to explore ways of financing variable expenses of MSME or corporate customers in the state suffering from power shortage. The fixed expenses, however, would have to be met by the promoters.

RBI also asked banks to conduct one-to-one meetings with their corporate customers individually to ascertain actual problems faced by their units and business or revenue loss due to power crisis.