CDR-like Mechanism For Medium Enterprises Mooted

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Mumbai, May 18: The Reserve Bank of India (RBI) has proposed a mechanism for debt restructuring on the lines of the corporate debt restructuring (CDR) for medium enterprises. RBI will constitute a special group to suggest appropriate operational guidelines in this regard, RBI said in its annual policy statement for 2004-05.

In order to enable the banks to determine appropriate pricing of loans to small and medium enterprises, there should be a system of proper credit records, RBI said and proposed that the Credit Information Bureau of India Ltd (CIBIL) would work out a mechanism, in consultation with RBI, Small Industrial Development Bank of India (Sidbi) and Indian Banks’ Association (IBA).

On debt restructuring mechanism for small and medium enterprises Mukand Ltd’s managing director Niraj Bajaj, said: "The proposal for a mechanism for debt restructuring for medium enterprises on the lines of corporate debt restructuring are positive initiatives. The debt restructuring mechanism could translate into a win-win situation from both the corporate’s as well as the lender’s point of view".

Following the announcement in the mid-term review of November 2003, the RBI had appointed a working group on flow of credit to small scale industries sector under the chairmanship of Dr AS Ganguly. The committee has since submitted its Report.