Page 39 - BANKING FINANCE JUNE 2016

P. 39

ARTICLE

REVIVING AN
MSME - THE
NEW WAY

T he Ministry of Micro, Small and Medium Enter- Identification of stress in the borrower
prises, Government of India (MSME Ministry) on
29th May, 2015 had notified a Framework for account
Revival and Rehabilitation of Micro, Small and
Medium Enterprises Framework. The manner for identification of stress in the MSME under
the Framework is same as that under the Framework for
In furtherance to that and in similar lines the Reserve Bank Revitalising Distressed Assets in the Economy . Here, an
of India (hereinafter referred to as "RBI has issued a Frame- account is made to be passed through several accounts, also
work to be adhered to by all the scheduled commercial known as "Special Mention Accounts" (SMA) before the
banks on 17th March, 2016 and is applicable for loans with same is classified as a Non Performing Asset (NPA). The fig-
value upto Rs. 25 crores. ure below shows the manner which an account is classified
under SMAs and finally NPA.

The contents of the Framework can be broadly classified
under the following heads -
 Identification of stress in the borrower; and

 Taking corrective measures to revive the entity.

In this write up we intend to discuss the mechanics of the
Framework and their impact.

About the author

Abhirup Ghosh
Senior Manager
Vinod Kothari Consultants Private Limited

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