In two years time, 2,500 small scale units are closed due to the big dent of commercial banks. Though the state government provides the small scale units with royalties, small scale industries have been shut down.
These units now have no problem of power supply yet they are running in losses, because of ever increasing cost of production. Though the small units have approached the commercial banks for capital, the bankers are very indifferent. The banks ignored the regulations of RBI. As per rules, if an industrial unit fails to pay interest for three months consequetively, the lender bank has to give hand holding at least for 30 days.
Later the banker has to implement corrective action plan. In the third stage the process of restructuring process should be implemented. In the fourth stage, new management shall be constituted with new directors and steps shall be taken to increase the size of capital. After the study of techno economic vibility, the unit shall be served with a notice. But the banks voilated most of the rules.