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MSMEs approach RBI for one-year moratorium on bank loan repayment

Updated: Mar 10, 2014 05:28:12pm
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Mumbai, Mar 10 (KNN) Reeling under slowdown, the MSME sector has  approached the Reserve Bank of India (RBI) to grant a loan repayment moratorium for one year and sanctioning of ad hoc demand loans by 20 per cent by the commercial banks.

These issues will come up at the meeting of RBI with the representatives of the Federation of Indian Micro, Small and Medium Enterprises (FISME) here on March-27. The meeting will be presided over by the RBI Deputy Governor K C Chakrabarty.

The other issues to come up at the meeting will include demand by the MSME industry to take urgent steps to popularize factoring, bill-exchange mechanisms and creation of bind market of MSME receivables.

Besides, a demand has been made that non-fund based limits be allowed to be provided by insurance companies and creating competition for banks lowering costs of these limits. These factors, at present are constricting their participation in public procurement.

According to industry officials, there will be a request for doing away with BLR (Base-II) norm- a cause of grave concern for firms having/wanting bank facilities.  The difficult norms for credit ratings are creating credit flow problem for the sector.  

The meeting will also be reviewing average time taken by banks on deciding MSME loan applications (new loans or enhancements) and adherence of existing guidelines
Closure or restructuring of MSMEs are an important issue that will come up for discussion.  The Ministry of MSME has given a proposal for amendment of MSMED Act (also development of Insolvency Act for natural persons) for allowing restructuring and closure of sick/ adversely affected units.  (KNN/PC)
 

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