Hit by a slowdown, rupee depreciation, and in a bid to increase the order book, machine tool manufacturers are urging bankers to lend aggressively.

The machine tool industry is the mother industry of the manufacturing sector. The contribution of the manufacturing industry to India’s GDP growth is just 16 per cent, according to IMTMA (Indian Machine Tool Manufacturers’ Association) President L Krishnan.

During the first half of 2014-15, machine tool consumption grew by 20 per cent and production by 28 per cent. Preliminary data suggest the sector has grown around 15 per cent in the October–December quarter. “The last fiscal was a challenging one.

Recent policy initiatives have had a positive impact and we have started seeing an increase in order flows. IMTMA expects 2015 to be a promising year for the machine tool industry,” Krishnan said.

Talking to Deccan Herald, on the sidelines of IMTEX-2015 here on Sunday, Rajkot-based Jyoti CNC Automation Managing Director Parakram Jadeja said, “Bankers should be aggressive in approving loans. Our customers are not getting finance easily. The delivery period of Public Sector Banks (PSBs) has increased from three to six months.”

Jadeja appreciated the speedy approvals by private banks and NBFCs (non-banking financial companies). “Few private banks and NBFCs have taken initiatives to lend aggressively… but their costs are higher.”

BFW Chief Executive Officer Ravi Raghavan chipped in: “Entrepreneurs should have easy access to finance. With no resources in hand an entrepreneur approaches PSBs and if the bank delays a decision, the long supply chain is wasted.” The growth of the manufacturing sector needs support from banks, he said.

On the RBI’s recent decision to cut the repo rate by 25 basis points (bps), Jadeja said, “The rate cut will help boost confidence as banks and other lending institutions are likely to pass on this reduction to customers by way of lower loan rates. This is possibly the beginning of more such cuts during the remaining part of the year.”

Raghavan hopes to see more rate cuts from RBI in the forthcoming monetary policy. On the company’s order book, Raghavan said: “There is lot of unpredictability in demand. Forecasting cycles of the customer have really shortened. BFW grew in the first half from April to September by about 30 per cent, but we are seeing a slowdown from November.”

An industry expert said, “The information technology (IT) sector gets funding in the millions of dollars from angel investors and venture capitalists. Unfortunately, no one comes forward to invest in machine tool companies. Development of low-end industries will create a high-end ecosystem.”

Rising NPAs (non-performing assets) since the past few years have impacted bank interest income, the expert said.

PSB State Bank of Mysore has opened 20 branches in Karnataka that are exclusively focusing the MSME (Micro, Small and Medium Enterprises) sector. An SBM official said, “Our bank is financing liberally to the MSME sector. Last year, we saw 20 per cent loan growth. This financial year till December, our exposure to the MSME sector grew at 20 per cent year-on-year.”

On recovery, the official said that “MSME units would sometimes face delays in realisation of booked debts and stocks may pile up on lack of demand.” In order to help such MSME units, “We are granting an additional standby credit of 15 per cent of existing working capital limit to tide over temporary mismatches in cash flow. We also help them by restructuring their liabilities.”

As per RBI norms, banks won’t ask for any security for loans up to Rs 10 lakh to the MSME segment. Moreover, SBM has decided not to seek any collateral security for up to Rs 1 crore. Such loans are guaranteed by the Credit Guarantee Trust Fund for MSMEs. The bank has also decided to bear the cost of guarantee premium for loans up to Rs 50 lakh, the official added.

SBM official said delays in loan processing might happen if valuers take time to submit their report on the security offered by borrowers. SBM has established specialised SME credit processing centres to quickly sanction loans to small units.