Bikky Khosla | 08 Jan, 2019
The New Year begins with good news for Micro, Small
and Medium Enterprises (MSMEs). The RBI last week permitted
a one-time restructuring of existing loans of stressed MSMEs,
provided the total fund and non-fund based exposure to such a borrower does not
exceed Rs 25 crore. Additionally, such a debt restructuring would not lead to a
downgrade in their asset classification. No doubt, this move is a big relief to
In another positive development, the central bank,
just a day after the aforesaid announcement, set up an expert
committee to look into problems facing the MSME sector, particularly in
relation to availability of finance. The committee, headed by former SEBI
Chairman U.K. Sinha, would try to find out long term solutions for financial
sustainability of the sector. It will also look into the structural problems
facing the sector and study the impact of the recent economic reforms on it.
in a positive development, on the very first day of this week, the RBI Governor
of the MSME sector. According to him there is no liquidity shortage at this
moment and the central bank will take steps if such an adverse situation arises
in the economy. He, however, admitted that over the last several months there
had been lot of talks over the issue of liquidity faced by NBFCs, adding that
he would meet representatives from the sector today and try to understand their
perspective on various issues.
developments are welcome. The urgency the central bank is showing to address the lack of availability of finance -- which has constrained the growth of the MSME
sector -- is
encouraging. Meanwhile, the recent decision by the Cabinet
Committee on Economic Affairs to extend the Interest Equalization benefit to
also augurs well for exporters as well as MSMEs. Products covered
under the scheme are produced mainly by MSMEs and the extension will help them reduce
their cost of operation significantly.
invite your opinions.