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 the sector.

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.

Then again in a positive development, on the very first day of this week, the RBI Governor met representatives 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.

These 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 merchant exporters 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.

I invite your opinions.