Sinha for transparent corporate debt restructuring of viable firms

A mechanism for the same has been set up under the guidelines issued by the RBI.

Union Finance Minister Yashwant Sinha, in his Union Budget for 2002-03 presented to the Parliament today said that in order to deal with forces of competition, industrial and other companies require restructuring on a continuous basis.

For this purpose it is essential to promote out of court mechanisms for timely and transparent corporate debt restructuring of viable entities, in addition to the use of legal avenues of financial restructuring.

A mechanism for Corporate Debt Restructuring (CDR) has been set up under the guidelines issued by the Reserve Bank of India. A small group consisting of bankers and others, under the chairmanship of Deputy Governor, Reserve Bank of India, has been set up to suggest measures to make its operation more efficient.

Sinha said that small scale industries are now subject to increasing competition with the completion of trade liberalisation. A new approach to the promotion of small scale industries therefore, has already been adopted.

Adequate credit flow is essential for the small scale sector. The net bank credit outstanding to small scale industries increased from Rs 45,789 crore on 31 March 2000 to Rs 48,445 crore on 31 March 2001.

In order to further increase the flow of credit the following measures have been taken

: 1. The limit for composite loans has been increased from Rs 2 lakh to Rs 5 lakh.

2. 391 specialised branches of public sector banks have been opened for small scale industries as of 30 September 2001.

3 The exemption limit for collateral security has been increased from Rs 25,000 to Rs 5 lakh. The project cost limit under the National Equity Fund has been increased from Rs 25 lakh to Rs 50 lakh.

4.The extension of credit to SSI has already been facilitated through the Credit Guarantee Scheme and the Credit Linked Capital Subsidy Scheme for Technology Upgradation.

5. Encouraged by the Kisan Credit Card Scheme, public sector banks have now decided to introduce a scheme called Laghu Udyami Credit Card (LUCC) Scheme for providing simplified and borrower friendly credit facilities to small businessmen, retail traders, artisans and, small entrepreneurs, professionals and other self employed persons, including those in the tiny sector.

6. Over 50 items of knitwear, certain agricultural implements, auto components, some chemicals and drugs, and others have been de-reserved.

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