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MSME Framework

Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises



In order to provide a simpler and faster mechanism to address the stress in the accounts of MSMEs and to facilitate the promotion and development of MSMEs, Reserve Bank of India has issued guidelines on Revival and Rehabilitation of MSMEs vide their circular No. RBI/2015-16/338 FIDD MSME & NFS.BC.No.21/06.02.31/2015-16 March 17, 2016 and our bank has implemented the same with immediate effect.

Salient features of the framework:-

The framework is applicable to MSMEs accounts having limits up to Rs. 25.00 crore.

Bank has formed Committees at Zonal Office level for implementation of the framework.

Stressed MSMEs shall have access to the Committee for resolving the stress in these accounts in accordance with regulations prescribed in this Framework.

Any MSME borrower may voluntarily initiate proceedings under this Framework, if the enterprise reasonably apprehends failure of its business or its inability or likely inability to pay debts or there is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth during the previous accounting year, by making an application to the branch or directly to the Committee.

The Committee will convene its meeting in five working days from the receipt of the application, to examine the account for a suitable CAP (Corrective Action Plan). The accounts with aggregate loan limit up to Rs.10 lakh may be dealt with by the branch manager / designated official at the branch and for loan limit above Rs. 10.00 lakh the cases are to be referred to the committee for a suitable CAP.

The Committee may explore various options to resolve the stress in the account. The Committee shall not endeavor to encourage a particular resolution option and may decide the CAP as per the specific requirements and position of each case. The options under CAP by the Committee may include: a. Rectification b. Restructuring c. Recovery

Within 30 days of convening its first meeting for a specific enterprise, the Committee shall take a decision on the option to be adopted under the corrective action plan and notify the enterprise about such a decision, within five working days from the date of such decision.

Upon finalization of the terms of the corrective action plan, the implementation of that plan shall be completed by the bank within 30 days (if the CAP is Rectification) and within 90 days (if the CAP is restructuring). In case recovery is considered as CAP, the recovery measures should be initiated at the earliest.



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