Revised RBI rules for rehab of MSMEs to reduce bad loans: Ficci

The RBI recently asked lenders to form district-level committees to resolve stressed loans to MSMEs

Reserve Bank of India's (RBI's) new framework for revival and rehabilitation of micro, small and medium enterprises (MSMEs) will help bring down bad loans in the sector, Federation of Indian Chambers of Commerce & Industry (Ficci) said on Friday.

"The formation of special mention account and mandatory formation of a committee at each district for stressed MSMEs by the banks would enable faster resolution of stress in an MSME account, thereby reducing NPAs (non-performing assets) in MSMEs," President of Ficci-Confederation of MSME, Sanjay Bhatia said.

The RBI recently revised rules pertaining to revival of advances to small businesses and asked lenders to form district-level committees to resolve stressed loans to MSMEs.

The new framework for revival and rehabilitation is applicable to MSMEs having loan limits up to Rs 25 crore, including accounts under consortium or multiple banking arrangement.

The framework as proposed by Ministry of MSME will be operationalised by all the banks not later than June 30, 2016.