RBI to set up panel to look into problems of MSMEs

The Reserve Bank of India Wednesday said an expert committee will be constituted to propose long-term solutions for the economic and financial sustainability of the MSME sector.

The panel's composition and its terms of reference will be finalised by the end of December, the RBI said in 'Statement on Developmental and Regulatory Policies'.

The report of the panel will be submitted by the end of June 2019.

Micro, Small and Medium Enterprises (MSMEs) contribute significantly to employment, entrepreneurship and growth in the economy.

MSEMEs remain, by their predominantly informal nature, vulnerable to structural and cyclical shocks, at times with persistent effects, the central bank said while announcing setting up the committee.

"It is important to understand the economic forces and transactions costs affecting the performance of the MSMEs, while often the rehabilitation approach to the MSMEs stress has focused on deploying favourable credit terms and regulatory forbearances," it said.

Earlier, the RBI's Central Board had advised that it should consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs 250 million, subject to such conditions as are necessary for ensuring financial stability.