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RBI sets up a committee to review current framework for MSMEs

Updated: Jun 19, 2019 06:01:35am
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RBI sets up a committee to review current framework for MSMEs

New Delhi, June 19 (KNN) The Reserve Bank of India (RBI) has set up an eight member expert committee on micro, small and medium enterprises (MSMEs) to suggest long-term solutions for the economic and financial sustainability of the MSMEs.

This committee is set up under the leadership of former Chairman of Securities and Exchange Board of India (SEBI) to review the current framework for the MSME Sector.

Also, “The committee will examine the factors affecting the timely and adequate availability of finance to the MSME sector,” the RBI said.

The committee is learnt to have suggested various long-term solutions for the economic and financial sustainability of MSMEs. The report has also mentioned mainstreaming the restructuring of stressed loans, considering that the RBI had given a one-year window to banks to do so in January.

The panel’s recommendations have come at a time when the government is anticipating changing the definition of MSMEs.

However, the proposed change under a new draft, as approved by the Cabinet but not yet accepted, is that annual turnover, rather than investment size, should be the criterion for such units. Under the draft, there would be no difference between a manufacturing and service unit. Micro can be up to Rs 5 crore of turnovers, small up to Rs 75 crore, and medium up to Rs 250 crore of turnover should be considered.

According to the 2006 definition, manufacturing units with investment below Rs 25 lakh were termed micro, those between Rs 25 lakh and Rs 5 crore termed small, and from Rs 5 crore to Rs 10 crore medium. For service units, the corresponding amounts were up to Rs 10 lakh for micro, Rs 10 lakh-2 crore for small, and Rs 2 crore-5 crore for medium enterprises.

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