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RBI: New guidelines issued for rehabilitation of sick MSEs

RBI: New guidelines issued for rehabilitation of sick MSEs


A unit will be considered sick if any of the borrowal account of the enterprise remains NPA for 3 months or more

Revising the definition of sickness in micro and small enterprises (MSEs), the Reserve Bank of India, on Thursday, asked banks for timely and adequate assistance to them as soon as signs of sickness were detected.

SICKNESS DEFINED

As per the new guidelines, a MSE would be considered sick if any of the borrowal account of the enterprise remains non-performing assets (NPA) for three months or more.

Earlier, a unit was considered sick if its borrowal account remained sub-standard for more than six months.

However, the RBI asked banks not to classify units as sick if they reach such a situation on account of “wilful mismanagement, wilful default, unauthorised diversion of funds, disputes among partners.”

Also, the unit need not to be in commercial production for at least two years to be declared sick, it added.

The new guidelines should be applicable for the year ending March, 2013, it said.

The RBI asked banks to take a sympathetic attitude and strive for rehabilitation of MSE units ...

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