New Delhi, Mar 3 (KNN) The banks both public sector banks as well as private banks along with some foreign banks have put in place a policy to  help MSMEs in Revival and Rehabilitation, said Ministry of Micro, Small and Medium Enterprises.

Under the Framework for Revival and Rehabilitation of MSME, the Ministry said, “All PSBs, private sector banks and 4 major foreign banks have put in place a Policy under the Framework.”

The Ministry added that a Corrective Action Plan (CAP) Committee has been formed.

So far, as many as 41,417 cases have been referred to 1770 CAPs by 52 banks out of which 29,595 cases have been resolved.

The Ministry said 27 Public Sector Banks, 21 Private Banks and 4 major foreign banks have proactively helped MSMEs to resolve revival and rehabilitation issues.

In March 2016, the RBI had issued a circular providing a framework for the revival and rehabilitation of MSMEs.

According to the RBI Circular, the framework is applicable to MSMEs with loan limits up to Rs 25 crore, including consortium lending.

Every bank shall form a committee at the district or regional level depending upon number of units lent, in order to provide the corrective action plan (CAP) to stressed SMEs.

The committee will comprise the regional head of the bank, the officer in charge of MSMEs, one independent external expert with expertise in MSME matters, and one representative from the State government (or a retired executive not below the rank of AGM of another bank).

The Circular said there should be board-approved policy regarding the appointment of members of the committee and the procedure to be followed by it in discharging its functions.

Even a stressed enterprise can apply to the committee for a CAP. The CAP could be either ‘rectification’ or ‘restructuring’.

Under rectification the bank may sanction ad hoc funding to the unit up to a maximum period of six months to help overcome the cash-flow crunch. Any rollover or repeated rectification will be tantamount to restructuring which will change the asset status of the account to substandard. (KNN Bureau)