Dimapur, Oct. 3 (EMN): Business Association of Nagas (BAN) on Sunday asserted the need for implementing Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act 2002, while stating that the contentions put forward by Nagaland Bar Association (NBA) against its implementation needs “serious deliberation on the context of state’s economic condition.”
BAN stated that under these provisions, “the banks may issue notices in writing to the defaulting borrower only after the account had been classified non-performing assets where the borrower defaults payment for 90 days and only after which the borrower is served 60 days notice to discharge the liabilities. The remedy of appeal to the Debt Recovery Tribunal is available under section 17 and 18 of the Act, against notice for possession and enforcement of security interest,” it read.
It said that it was important to uplift the professions of businesses and entrepreneurs ‘who are solely responsible for job creation while contributing to the economy of the state’.
“The main four engines to keep the economy going are consumption, investments, exports, and the government. Of these, the latter’s contribution has fiscal constraints. Finance is the main fuel of every business, no matter what size,” read the statement.
Further, it stated that enterprises needed finance to start up a business, run the business and expand the business but unfortunately, ‘many businesses, especially small establishments don’t have the resources to shoulder the expense’.
‘The consequence of not receiving a business loan for a firm is quite drastic. Without banks giving out any personal loans, business loans and financial assistance to their borrowers, the amount of money put into investments diminishes and the financial markets underperform. There is also a cyclical effect. When investment slows down, economic growth slows as a consequence and customer demand is low as items become difficult to afford and the economy suffers,’ it said.
“Banks’ failure to finance businesses causes two types of unemployment. The unemployment that is a direct result of firms not being able to afford to pay more employees without receiving the requisite business loans or personal loans.
“Demand-deficient unemployment is when an enterprise has to let go of its current employees or stop employing new individuals as demand for their product is low. To cut costs the enterprise drops its employee count and stops hiring new people.
“To keep the ship afloat and ensure that all the operations are running smoothly, businesses therefore need to have enough working capital,” it said.
“In a situation where the Government doesn’t have enough revenue to support entrepreneurs and businesses and banks are not extending loans because of non-implementation of Sarfaesi Act, should our state continue to reel under a salaried economy of government servants alone? What about our economy? Are we not indulging in systematically finishing the present and future entrepreneurs and businesses in Nagaland by trying to deny the main lifeline for businesses – which is finance,” it added.
