In a major move to boost the sluggish MSME sector, especially after the IL&FS crisis, the Reserve Bank of India has given an indication to go for loan restructuring scheme of the MSMEs in India. The move will help the ailing MSMEs who failed to repay the bank loans on time. It would also help the apex bank to address their rising bad loan problem because MSMEs comprise 214 per cent of the public sector bank NPA.

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Speaking on the matter Shaktikanta Das, Governor, Reserve Bank of India told PTI, "Met MSME associations to gauge the current state of MSMEs, implementation of loan restructuring scheme."

Hailing the RBI governor for this move Rajeev Chawla, Chairman, IamSMEofIndia said, "It's a welcome move by the RBI and it would help those MSMEs who are in the bank NPA list and their project is still viable subject to market and business point of view." Chawla went on to add that the move would also help RBI to handle their rising NPA problem as MSMEs comprise near 14 percent of the net NPA.

"Post 2008 corporate profits have gone down drastically and hence the profit of the MSMEs because MSMEs work as vendors to the corporates. Hence, there is a good number of MSMEs who are on the list of bank NPA though their projects are still viable from market and business perspective. Once their business gets on track, they can further avail the bank loans for further expansion and need of their business," said Chawla.

Hence, the move is expected to boost not only the ailing MSMEs whose projects are still viable from market and business perspective but the government crackdown on rising bad loans in the public sector banks.