RBI for change in ‘sick' nomenclature for MSMEs

Mumbai, Feb. 4: The Reserve Bank of India wants the definition that classifies industrial units in the micro, small and medium enterprise category as ‘sick' changed as barely 2 per cent of such units have got rehabilitated in the last few years. The proposal to revise the definition is aimed at detecting signs of incipient sickness among MSME units so that preventive measures could be taken by all stakeholders, including banks, to nurse them back to health. “As per the current definition, a unit is classified as sick when there is erosion in the net worth due to accumulated cash losses to the extent of 50 per cent. By the time the units reach this stage they are nearly dead. So, the definition of sick units needs to be changed,” said Mr K. C. Chakrabarty, Deputy Governor, Reserve Bank of India. A Government standing advisory committee is looking into the possibility of making this change, he said at a seminar organised by the Small & Medium Business Development Chamber of India. The Deputy Governor called upon banks to set up financial management advisory desks to help MSMEs with non-core functions such as accounting, taxation and financial management. Banks could charge a reasonable fee to provide these services to the enterprises. Underscoring the extent of financial exclusion when it comes to MSMEs, Mr Chakrabarty said about 93 per cent of the SME promoters depended on self-finance or informal sources of financing. He observed that the top management of banks should show their commitment to the MSME sector by clearly spelling out the targets for expanding the MSME portfolio at the branch level and closely monitoring them. Further, to ensure transparency, banks should disclose the interest rates they charge their borrowers segment-wise in the balance sheets. The deputy governor said banks should tighten their credit appraisal standards. They should not relax their standards just because credit guarantee institutions such as the Credit Guarantee Fund Trust for Micro and Small Enterprises and the Export Credit Guarantee Corporation of India will pick up the tab should loans turn bad. Entrepreneurs, said Mr Chakrabarty, should be encouraged to experiment with business ideas. If the entrepreneurs fail in their ventures, they should have an easy exit policy.

HBL

RBI pulls up banks for laxity in SME finance

...Reserve Bank of India Deputy Governor KC Chakrabarty on Saturday pulled up banks for showing laxity in financing small and medium enterprises (SMEs) in the country......

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And they are no more...............

Shri K.V.Balasubramanian, retired Grade C officer (DBOD) and Shri. Mahadevan, Retired Banking Assistant, DBOD, both from Mumbai reached God's abode on 25th and 26th Jan. 2012.
- As reported by Venugopalakrishnan  (via e-mail)

I regret to advise the death of Shri M.Sankarnarayanan in Trivandrum on January 28, 2012. He was 70 years old and served in RBI from 1962 to 2002. He retired as Deputy Treasurer in TVM Office.

- As reported by P.P.Ramachandran (via e-mail)

Luck at lunchtime

..... “I have been amused to see the kind of money people spend on this. It is corporate gambling,” opines an RBI employee, a regular visitor to the shop. “If they had so much money, they could very well go to the quiz shows on television and try their luck there.” He, however, does not buy tickets. He only watches others splurge on them and entertains himself....

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How any one can expect RBI can be an autonomous body?

It is not very much clear Why Shri A. Chandramouliswaran, a former Executive Director has given a small writeup about RBI autonomy - a myth (VITALINFO -1st Feb. 2012). The Central Board shall consist a Governor and not more than four Deputy Governors to be appointed by the Central Govt. Four directors to be nominated by the Central Govt one from each of the four local boards. Ten directors to be nominated by the Central govt. One Govt offiial to be nominated by the Central Govt. The Central Board is full of Govt nominees and they will toe the Central Govt policies. How any one can expect RBI can be an autonomous body. One of our friends has also commented about the delay in our pension upgradation. I put a straight question whether any of the Central Board Directors raised the upgradation of pension issue of retired employees in any of the Board Meeting. So far it has not been included as item for discussion. They will be busy framing endless rules, regulations, codes, norms and guidelines for the corporate world, banks, insurers, and every financial intermediary. India's regulators, like the political class and powerful bureaucracy, are accountable to none, because we do not have a structure of transparency, oversight and accountability. 

 - K.P.SASTRY, Retd. Asstt. Manager, RBI, Hyderabad

pskalluri@yahoo.com

India to get index to assess trends in housing sector

...A joint initiative of the Reserve Bank of India and the Housing and Urban Poverty Alleviation (HUPA) ministry, the first set of data for ten cities is expected to be released by March end. Initially, HSUI will be released on a pilot basis for just ten of the fifty Indian cities......

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Pending, a long list of bills

..... "We have proposed some amendments in the Rajasthan Protection of Interests of Depositors (in financial establishments) Act and will send it to RBI for the final consideration. By the end of this month, the process will get completed.......

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How electronic payments work

National Electronic Fund Transfer (NEFT) and Electronic Clearing Systems (ECS) are both modes of electronic payments. But that is where the similarity ends. The two terms are often mixed up or not fully understood. Here's explaining the two routes of transferring funds online.............

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