RBI panel proposes fund for MSMEs |
As the international MSME day is celebrated across the world, a committee formed by the Reserve Bank of India, has recommended a 722.3 million dollars distressed asset fund for micro, small and medium enterprises (MSMEs). The committee headed by former Securities Exchange Board of India Chairman U.K. Sinha, has proposed the funds which will assist units in a cluster where there is a change in the external environment such as plastic ban, which had resulted in large numbers of such entities becoming non-performing. It would be a variation of venture capital fund and would be of significant size which makes equity investments that help unlock debt or help revive sick units. It is meant for equity investment of 1444.5 dollars to 14445.5 dollars in proprietary or partnership MSMEs. In addition, it also suggested revisions in loan limit sanctioned under MUDRA by the Finance Ministry to 28891 dollars from 14445.5 dollars. The committee has also recommended banks should set their targets of MSME lending to 50% of the net bank credit for universal banks and 80% for small finance banks. At present, the overall priority sector lending target for a universal bank is 40% of their net bank credit and 75% for small finance bank.
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