Credit and Finance for MSMEs: Industry physique for small companies Federation of Indian Micro and Small & Medium Enterprises (FISME) has cautioned its members, who’re current or potential prospects of Kotak Mahindra Bank, of the latter’s “restrictive and unethical practices.” In a three-page advisory word issued by FISME final week titled ‘Advisory for MSMEs on Kotak Mahindra Bank’, FISME stated “a relationship with Kotak is often seen to come with hidden costs, higher interest rates, excessive forex commissions, overcharging for routine services and poor service delivery.” A duplicate of the word was seen by Financial Express Online.
FISME, which has over 700 member associations representing round 20 lakh MSMEs, in its word has cited challenges round non-compliance prices, foreclosures prices; not issuing no-dues clearances, false assurances, making use of ‘debit freezes’ with out prior intimation, and so forth., confronted by small companies, who wish to change to a different financial institution, exiting Kotak Mahindra Bank.
Below are the screenshots of the advisory word by FISME to its members:
“Shockingly, on challenging this harassment by Kotak in a court or at ombudsman, a flimsy argument is offered that it is not their responsibility to inform customers individually and that the customer ought to have checked the Kotak website- meaning thereby that what is written in the fine lines if foe the customer to read and understand,” FISME stated within the word.
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Kotak Mahindra Bank’s spokesperson Rohit Rao in response to FISME’s allegations informed Financial Express Online, “The FISME’s letter, which you have shared over email, makes unfounded allegations against our bank. FISME has concealed and misrepresented vital facts. We vehemently deny each and every allegation. Kotak Mahindra Bank never indulges in practices that are either against banking norms or are immoral or illegal. The bank serves numerous MSME customers across India and has always endeavoured to provide high quality service to its esteemed customers. I would request you to refrain from writing anything that is malicious or incorrect in your esteemed publication.”
Meanwhile, Anil Bhardwaj, Secretary General of FISME stated Kotak Mahindra Bank ought to revoke the non-compliance and different prices imposed on the 5 whistleblower MSMEs (based mostly on which points have been raised by FISME towards the financial institution) and so they be allowed to exit the financial institution. “Also, the bank should come out with transparent guidelines on non-compliance charges. In case there is violation, the red flag should be raised monthly/ quarterly. Raising the non-compliance charges at the time when the customer is exiting must be considered mala fide and prohibited,” Bhardwaj informed Financial Express Online.
SME sector has been among the many progress areas for Kotak Mahindra Bank, one of many largest non-public lenders within the nation. The financial institution had recorded a 21 per cent year-on-year progress in its SME phase to Rs 18,994 crore throughout Q3 FY2022 from Rs 15,702 crore in Q3 FY2021 and 4 per cent from Rs 18,205 crore throughout Q2 FY2022, based on its Q3 outcomes.
“We focused on new quality client acquisition both in the secured and unsecured space in the MSME segment. 85% of the book qualifies for priority sector. We will continue to grow in the MSME space by expanding distribution footprint, multiple and deeper channels and technology enablement,” Shanti Ekambaram, Group President – Consumer Banking, Kotak Mahindra Bank had stated throughout Q3 earnings name. The financial institution had additionally partnered with National Small Industries Corporation (NSIC) in August final 12 months to supply enterprise and dealing capital loans at ‘attractive’ rates of interest to MSMEs registered with NSIC.
Source: www.financialexpress.com”