In an attempt to revive the ailing small and medium enterprises (SMEs) sector, the Reserve Bank of India (RBI) has set up a working group, headed by KC Chakrabarty chairman and managing director Punjab National Bank, on rehabilitation of sick SMEs .
Mahabir Prasad, minister for micro, small and medium enterprises (MSMEs), informed the Parliamentary consultative committee attached to his ministry that the working group is finalising its report at present. It has already met with various stakeholders including commercial banks and financial institutions, MSME Associations, state governments, MSME entrepreneurs and is now in the process of collecting information from sick MSMEs to gain useful insight at the grassroots level.
However, the RBI has already taken a number of significant steps to revive the sector, Prasad said. The apex bank has issued guidelines to all public sector banks on one-time settlement (OTS) Scheme for SME and also guidelines for debt restructuring mechanism for all such eligible enterprises.
Additionally, the RBI has also introduced a simplified one-time settlement scheme for small borrowers whose principal amount is up to Rs 25,000 so that borrowers become eligible for fresh loans, the minister added.
He also informed the committee which was meeting on the issue of Sickness in the MSE sector that the RBI has at its regional offices also constituted empowered committees to review the progress in rehabilitation of sick SMEs, which would prove to be useful in overcoming the problem of sickness.
However cautioning the banks, the Prasad said, “It has been noticed that more often than not the benefit of loan goes to rich entrepreneurs. This trend has to be reversed.”
According to a recent analysis by RBI, the number of sick micro and small enterprises in the country has reduced to 1.14 lakh till March 2007 as compared to the previous year.