The Reserve
Bank of India today placed on its website (www.rbi.org.in),
the Report of
the Working Group on Rehabilitation of Sick SMEs for wider dissemination and
comments. Comments on the Report could be sent to the Chief General Manager-in-Charge,
Rural Planning & Credit Department, Reserve Bank of India, Central Office,
Fort, Mumbai-400001 or could be e-mailed. A
Working Group was constituted under the chairmanship of Dr. K. C. Chakrabarty,
Chairman and Managing Director, Punjab National Bank to suggest measures for improving
credit flow to the SME sector as well as measures for early implementation of
rehabilitation/nursing of sick SME units by examining feasibility of bringing
in additional capital through alternative routes, such as, equity participation,
venture financing, etc. The Working Group held wide ranging discussions with the
stakeholders, namely, industry associations, banks and Government agencies. The
Working Group submitted its report on April 17, 2008. The Working Group
has given various recommendations/measures/actions, which need to be taken by
banks, NABARD, SIDBI, RBI and State Government for enhancing credit flow to the
SME sector as well as for early implementation of rehabilitation/nursing of sick
SME units. Highlights: - As an incentive for
proper restructuring package at the time of rehabilitation, necessary support
for business restructuring, modernisation, expansion, diversification and technological
upgradation as may be felt necessary by the lenders may also be encouraged. Support
schemes like Credit Linked Capital Subsidy Scheme in case of units in other (than
rural) areas, KVIC Margin Money Scheme (for units in rural areas) may be extended
for rehabilitation packages also.
- The State Governments should
introduce a Single Window concept for providing relief and concessions to sick
Micro and Small Enterprises (MSEs).
- In order to incentivise
the banks to take rehabilitation measures, the repayment of any additional exposure
taken as part of the rehabilitation package should be given priority on the cash
flows as well as security as compared to other debt.
- The
interest of at least six months after commercial production can be included as
a part of the project cost. Sufficient moratorium say, two years for repayment
of the principal should also be given so as to prevent cases of incipient sickness
at the commencement of production and help units to establish themselves in the
market at the beginning. .
- Medium Enterprises should be taken
out of the purview of BIFR and the banks given the responsibility of their rehabilitation,
more so because only a fraction of the medium enterprises are covered under Sick
Industries Companies (Special Provisions) Act, 1985 (SICA) and their rehabilitation
done under the supervision of BIFR.
- Raising the limit
of Rs 20 lakh to Rs 50 lakh for Lok Adalats, measures to strengthen the DRT/legal
machinery, dedicated Bench for SMEs to expedite the process of recovery, Asset
Reconstruction Companies especially for Micro Small and Medium Enterprise (MSME)
loans are some other suggestions of the Working Group.
Alpana
Killawala
Chief General Manager Press
Release : 2007-2008/1375 | |