Mumbai: The Reserve Bank of India (RBI) on Wednesday set up an expert committee under former Sebi chairman U.K. Sinha to suggest long-term solutions for the economic and financial sustainability of the MSME sector. RBI has announced the panel a day after it allowed a one-time restructuring of existing debt up to ₹ 25 crore for the micro, small and medium enterprises (MSMEs) which have defaulted on payment but the loans given to them have continued to be classified as standard assets.
The eight-member committee will also examine the factors affecting the timely and adequate availability of finance to the sector, the central bank said in a statement. “The expert committee will submit its report by the end of June 2019," it said.
The MSME panel has been asked to review the current institutional framework in place to support the MSME sector and study the impact of the recent economic reforms on the sector and “identify the structural problems affecting its growth".
To study the global best practices with respect to MSMEs and recommend its adoption in India, wherever appropriate, and review the existing MSME-focused policies and its impact on the sector are among the issues which the panel will look into.
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The U.K. Sinha-led MSME panel has also been asked to propose measures for leveraging technology in accelerating growth of the sector and suggest long-term solutions for the economic and financial sustainability of the MSME sector.
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While constituting the panel, RBI said that considering the importance of the MSMEs in the Indian economy, it is essential to understand the structural bottlenecks and factors affecting the performance of the MSMEs. Such enterprises contribute about 40% to India’s export and 45% in the manufacturing sector.
In am related development on Wednesday, RBI governor Shaktikanta Das said he will be meeting the representatives of non-banking finance companies (NBFCs) and MSMEs next week.