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An RBI-appointed panel Monday sought suggestions from the public on long-term solutions for economic and financial sustainability of MSME sector, including ways to improve credit rating mechanism to help them raise funds at competitive rates.

The panel is undertaking a comprehensive review of the sector to identify causes and propose long-term solutions for its development, the central bank said in a statement.

The committee was set up in January under former Sebi chairman U K Sinha.

MSMEs contribute about 45 per cent of the manufacturing output, over 40 per cent of total exports of the country, and around 8 per cent of the country's GDP.

The committee has sought suggestions till March 28 on "definition of MSME for classification / identification of MSME in the context of present system of investment / turnover based criteria".

The panel also wants suggestions for improving the credit rating mechanism for MSMEs, besides infrastructure gaps and problems affecting the development and growth of MSME clusters.

The committee also wants to know from the stakeholders if the District Industrial Centres (DICs) have met the intended objective.

Currently, micro enterprises in the manufacturing sector are those whose investment in plant and machinery is below Rs 25 lakh. Those with investment between Rs 25 lakh and Rs 5 crore are classified as small enterprises and those having investment and machinery in the range of Rs 5-10 crore are classified as medium enterprises.

There is separate investment criteria for classification of micro, small and medium enterprises (MSMEs) in the services sector.

The government provides certain benefits to the MSME sector, yet they face lot of problems in getting credit at affordable rates.

Earlier this year, the RBI had allowed a one-time restructuring of existing debt of up to Rs 25 crore for MSMEs which have defaulted on payment but the loans given to them have continued to be classified as standard assets.

While announcing setting up of the panel, the RBI had said it would submit its report by the end of June 2019.

Published On : 18-03-2019

Source : Business Today

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