RBI urges Govt. to set rehabilitation fund for sick MSMEs

BANGALORE, INDIA:

In the wake of rising number of sick micro, small and medium enterprises (MSMEs), the Reserve Bank India (RBI) has suggested the government for setting up a rehabilitation fund for reviving of such units, reports media.

According to RBI data, the number of sick units in MSME sector has gone up by 16 percent to 90,141 units in March 2011 from 77,723 in March 2010.

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".

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Chakrabarty, during the conclave last week, also said that in spite of various measures taken by the RBI and the government, availability of credit for the sector remains a major issue.

Chakrabarty also said there is a growing need for venture or risk capital for financing high growth potential and start-up SMEs.

Finance Minister Pranab Mukherjee in his Budget 2012-13 has proposed setting up a Rs 5,000 crore 'India Opportunities Venture Fund' with SIDBI to enhance availability of equity to the SME sector.

Expressing concern over the flow of equity capital in the sector, 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".

Source: www.smetimes.in