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RBI recommends setting up rehabilitation fund for sick MSMEs

MUMBAI: The Reserve Bank has recommended setting up rehabilitation fund for reviving sick micro, small and medium enterprises (MSMEs). Initially rehabilitation of sick MSMEs could not be taken up due to non-availability of promoters’ contribution in a large number of cases.
 
RBI Deputy Governor Mr K C Chakrabarty said that in spite of various measures taken by the RBI and the government, availability of credit for the sector remains a major issue.
 
“There is a need to implement a corporate governance code for SME sector and adoption of corporate governance framework by SMEs in India is indispensable for taking this sector to a higher growth trajectory,” he said.
 
On the MSE (Medium and Small Enterprises) loan policy, he said,”...banks have also been advised to review and put in place MSE loan policy, restructuring or rehabilitation policy and non-discretionary one time settlement scheme for recovery of non-performing loans, duly approved by their board of directors".
 
The number of sick units in MSME sector has gone up by 16 per cent to 90,141 units in March 2011 from 77,723 in March 2010, as per RBI data.
 
On the MSE (Medium and Small Enterprises) loan policy, he said,”...banks have also been advised to review and put in place MSE loan policy, restructuring or rehabilitation policy and non-discretionary one time settlement scheme for recovery of non-performing loans, duly approved by their board of directors.
 
Expressing concern over the flow of equity capital in the sector, Mr Chakrabarty said, “At present, there is almost negligible flow of equity capital into this sector. SEBI has permitted BSE and NSE to set up an exchange for MSMEs, which would help SMEs to raise funds from capital markets”.
 

Finance Ministry committee submits recommendation on legislative changes for NBFCs

Advisory committee headed by Alok Nigam, joint secretary in the department of financial services has recently submitted  recommendations on legislative changes for NBFCs....

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NBFCs will have the freedom of drafting the FPC without sacrificing the spirit underlying the guidelines

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No relaxation in loan restructuring guidelines

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Govt plans to tweak farm lending norms to ease NPA pressure

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Bankers to RBI: Two years timeline for restructured assets to be classified as standard assets

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Even the as they are readying to ring in the new year with quite optimism, the Reserve Bank of India (RBI) has dampened their spirits by tightening rules for the non-bank...
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