Lok Sabha Question No. 2169 (UNSTARRED), answered on 2016-07-29
Subject: Credit Flow to Silk Industries
Ministry: FINANCE
Asked by: ADHIR RANJAN CHOWDHURY

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. 2169 TO BE ANSWERED ON THE 29 TH  JULY, 2016/SHRAVANA 7, 1938(SAKA) CREDIT FLOW TO SICK INDUSTRIES

## 2169 SHRI ADHIR RANJAN CHOWDHURY:

## Will the Minister of Finance be pleased to state:

- (a) whether  the  public  sector  banks/financial  institutions provide  loan  to  sick industries, if so, the details thereof; and
- (b)  the  steps  taken/being  taken  by  the  Government  to  increase  credit  flow  to  sick Industries?

## Answer The Minister of State in the Ministry of Finance

## (SHRI SANTOSH KUMAR GANGWAR)

(a): Yes, Madam. Banks provide loan to sick Micro and Small Enterprises (MSE) and are given need based financial support when found viable by undertaking a Techno Economic Viability (TEV) study as per Reserve Bank of India (RBI) guidelines. After determining  the  viability  of  the  sick  units,  rehabilitation  packages,  which  include additional funding, reduction in rate of interest, waiver of penal interest etc is being extended to sick companies. Till 31.03.2015 Rs. 257.10 billion to  5,34,861 sick MSE units have been financed by Scheduled Commercial Banks (SCBs).

Further, the sick industries referred to Board for Industrial and Financial Reconstruction (BIFR), where sanctioned scheme is in operation, financial assistance  would  be  provided  by  way  of  loans  by  SCBs  and  Public  Financial Institutions.  As  on  18/07/2016, 6334 references have been registered in BIFR and 5376 references have been discharged.

(b):  In order to provide a simpler and faster mechanism to address the stress in the accounts of Micro, Small and Medium Enterprises (MSMEs), Government of India, vide  Gazette Notification dated May 29, 2015 had notified   a 'Framework for Revival and  Rehabilitation  of  Micro,  Small  and  Medium  Enterprises'.  However,  certain changes  in  the  captioned  framework  have  been  carried  out  in  order  to  make  it compatible  with  the  existing  regulatory  guidelines  of  Reserve  Bank  of  India  (RBI). The RBI has notified the same on 17.03.2016 for revival and rehabilitation of MSMEs having loan limits up to Rs. 25 crore.  Restructuring of loan accounts with exposure of above Rs. 25 crore continue to be governed by the extant guidelines on Corporate Debt Restructuring (CDR)/Joint Lender's Forum (JLF) mechanism.

In order to provide timely financial support to MSE facing financial difficulties during their Life Cycle, guidelines have been issued to banks to review their existing lending policies  to  the  MSE  sector  and  tune  these  policies  by  incorporating  therein  the provisions for sanctioning of Standby Credit Facility in case of term loans, Additional

Working  Capital  Limits,  Mid  Term  Review  of  Regular  Working  Capital  Limits, Timelines for Credit Decisions, so as to facilitate timely and adequate availability of credit  to  viable  MSE  borrowers  especially  during  the  need  of  funds  in  unforeseen circumstances.

- ***