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RBI gives freehand to banks for revival of sick MSEs

RBI gives freehand to banks for revival of sick MSEs
PTI
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First Published: Mon, Sep 12 2011. 08 51 PM IST
Updated: Mon, Sep 12 2011. 08 51 PM IST
Mumbai: The Reserve Bank of India on Monday asked banks, barring regional rural banks, to chalk out a restructuring and rehabilitation plan for revival of sick micro small enterprises (MSE).
“Banks are advised to put in place their own board- approved restructuring and rehabilitation policy for revival of viable or potentially viable sick MSE units or enterprises,” RBI said in a circular on Monday.
With this, the central bank withdrew its earlier notifications that directed commercial banks to stick to the guidelines for revival of a sick SSI unit.
However, the central bank maintained that commercial banks can lend below base rate in case of a restructured loan of a sick SSI unit.
“In case of restructured loans if some of the WCTL (Working Capital Term Loan) and FITL (Funded Interest Term Loan) need to be granted below base rate for the purpose of viability, such lending by scheduled commercial banks will not be construed to be a violation of the base rate guidelines,” the RBI said.
As per the RBI norms, banks are barred from lending below base rate to borrowers.
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First Published: Mon, Sep 12 2011. 08 51 PM IST
More Topics: RBI | MSE | Banks | Restructuring | Corporate News |