The Reserve Bank of India had constituted a Working Group on rehabilitation of sick SMEs, under the Chairmanship of Dr. K. C. Chakrabarty, the then Chairman & Managing Director, Punjab National Bank, to look into the problems faced by new as well as sick SMEs and suggest remedial measures. The Working Group submitted its Report in the year 2008.
The recommendations of the Working Group, inter-alia, include
- lending in case of all advances upto Rs. 2 crore to be done on the basis of scoring model;
- the applications forms to be so designed that all documents required to be executed by the borrower on sanction of the loan from its part;
- simplified application cum sanction form be introduced in case of all micro enterprises for loans upto Rs. 1 crore and working capital under Nayak Committee norms;
- banks who have sanctioned term loan singly or jointly must also sanction Working Capital limit singly (or jointly), to avoid delay in commencement of commercial production;
- introduce Centralised Credit Processing Cell;
- banks to focus on opening more specialised micro, small and medium enterprise branches;
- banks to consider introduction of Factoring Services, particularly for MSMEs;
- new definition of sick small enterprise to remove the delay and
- Timely identification and treatment of sickness in MSME sector.
The RBI issued guidelines to all Scheduled Commercial Banks on May 4, 2009 advising them to consider, for speedy implementation, the recommendations made by the Working Group with regard to timely and adequate flow of credit to the MSE sector.
Ministry of MSME has notified a Framework for Revival and Rehabilitation of MSMEs vide a Gazette Notification dated 29.05.2015 for the purpose of facilitating the promotion and development of MSMEs. Under this framework, any enterprise can seek revival and rehabilitation benefit through a Committee constituted by the banks which comprises representative of State Government, experts, regional or zonal head of the bank and the officer in charge of MSMEs credit department of the bank.
This information was given by the Minister of State, Micro, Small and Medium Enterprises, Giriraj Singh in a written reply to a question in Rajya Sabha.
Source: Business Standard
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