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Last updated: 03 Jan, 2019  

msme-THMB-2010.jpg RBI sets up committee on credit concerns of MSMEs

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SME Times News Bureau | 03 Jan, 2019

The Reserve Bank of India (RBI) on Wednesday set up an expert committee headed by former SEBI Chairman U.K. Sinha to look into challenges facing the MSME sector, particularly in relation to availability of finance.

A statement said that the committee would propose long-term solutions for the economic and financial sustainability of the micro, small and medium enterprises (MSME) sector currently plagued by liquidity and other issues.

The committee will examine the factors affecting the timely and adequate availability of finance to the sector, as well as study the global best practices regarding MSMEs and recommend its adoption in India.

The move comes a day after the RBI permitted a one-time restructuring of existing MSME loans that are in default but "standard" as on January 1, 2019, without an asset classification downgrade.

To be eligible for the scheme, the aggregate exposure, including non-fund based facilities of banks and non-banking finance companies (NBFCs), to an MSME borrower should not exceed Rs 25 crore as on January 1, 2019.

"It has been considered necessary that a comprehensive review is undertaken to identify causes and propose long term solutions, for the economic and financial sustainability of the MSME sector," the statement said.

"Towards this end, it was announced in the Fifth Bi-Monthly Monetary Policy Statement for 2018-19, dated December 5, 2018, that the RBI will constitute an Expert Committee on Micro, Small and Medium Enterprises."

The panel will also review the current institutional framework in place to support the MSME sector, study the impact of the recent economic reforms on the sector and identify the structural problems affecting its growth, the statement added.

Besides Sinha as the Chair, the committee will have the Additional Secretary, Development Commissioner MSME Ram Mohan Mishra, Financial Services Joint Secretary Pankaj Jain, State Bank of India MD P.K. Gupta, ICICI Bank Executive Director Anup Bagchi, IIM-Ahmedabad Professor Abhiman Das, iSPIRT Foundation Co-founder Sharad Sharma and Dvara Trust Chairperson Bindu Ananth.

Support for MSMEs was one among the contentious issues between RBI and the government leading to the abrupt resignation of previous RBI Governor Urjit Patel last month and the immediate appontment of his successor Shaktikanta Das, who had earlier retired as the Union Economic Affairs Secretary.

Earlier on Wednesday, Das announced he will hold talks with representatives from the MSME and NBFC segments next week.

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RBI must adjust the date as of January 1st 2017
Bhagawath Prasad | Sat Jan 5 02:40:42 2019
Sir, Restructuring of loans are been given only those that are standard as of January 1st 2019 , this is of no big use for MSMEs , as everyone is aware of the fact that the weak cash-flow issue started from demonatization , many of us have taken loans and invested for augmenting production capacities on belief that the new government is business friendly and growth-oriented and trust factor created that business will go many folds , however in reality what happened is visibly seen by all of us, thereby the scheme given for standard accounts upto an 2019 is of no use , as many won't meet eligibility criteria , it will only help if it's extended upto jan1st 2017, I urge RBI to considering the date adjustment for back dated.

Good Move by Government
Bhagawath Prasad | Thu Jan 3 17:40:46 2019
It;s long awaited ,I am hoping that the move will help stressed MSMEs

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