Q.38. What is the procedure and time frame for conducting the viability study?

The decision on viability of the unit should be taken at the earliest but not later than 3 months of the unit becoming sick under any circumstances. The following procedure should be adopted by the banks before declaring any unit as unviable:·         A unit should be declared unviable only if the viability status is evidenced by a viability study. However, it may not be feasible to conduct viability study in very small units and will only increase paperwork. As such for micro (manufacturing) enterprises, having investment in plant and machinery up to Rs. 5 lakh and micro (service) enterprises having investment in equipment up to Rs. 2 lakh, the Branch Manager may take a decision on viability and record the same, along with the justification.·         The declaration of the unit as unviable, as evidenced by the viability study, should have the approval of the next higher authority/ present sanctioning authority for both micro and small units. In case such a unit is declared unviable, an opportunity should be given to the unit to present the case before the next higher authority. The modalities for presenting the case to the next higher authority may be worked out by the banks in terms of their Board approved policies in this regard.·         The next higher authority should take such decision only after giving an opportunity to the promoters of the unit to present their case.·         For sick units declared unviable, with credit facilities of Rs. 1 crore and above, a Committee approach may be adopted. A Committee comprising of senior officials of the bank may examine such proposals. This is expected to improve the quality of decisions as collective wisdom of the members shall be utilized, especially while taking decision on rehabilitation proposals. ·         The final decision should be communicated to the promoters in writing. The above process should be completed in a time bound manner and should not take more than 3 months.

Q.39. What are the RBI guidelines on One Time Settlement scheme(OTS) for MSEs for settlement of their NPAs?

Scheduled commercial banks have been advised in terms of our circular RPCD.SME&NFS. BC.No.102/06.04.01/2008-09 dated May 4, 2009 to put in place a non -discretionary One time Settlement scheme duly approved by their Boards. The banks have also been advised to give adequate publicity to their OTS policies. (Refer circular RPCD.SME&NFS. BC.No.102/06.04.01/2008-09 dated May 4, 2009)

Q.40. Apart from the loans and other banking facilities, do the banks provide any guidance to MSE entrepreneurs?

Banks provide following services to the MSE entrepreneurs:Rural Self Employment Training Institutes (RSETIs)At the initiatve of the Ministry of Rural Development (MoRD), Rural Self Employment Training Institutes (RSETIs) have been set up by various banks all over the country. These RSETIs are managed by banks with active co-operation from the Government of India and State Governments. RSETIs conduct various short duration (ranging preferably from 1 to 6 weeks) skill upgradation programmes to help the existing entrepreneurs compete in this ever-changing global market. RSETIs ensure that a list of candidates trained by them is sent to all bank branches of the area and co-ordinate with them for grant of financial assistance under any Govt. sponsored scheme or direct lending.Financial Literacy and consultancy support: Banks have been advised to either separately set up special cells at their branches, or vertically integrate this function in the Financial Literacy Centres (FLCs) set up by them, as per their comparative advantage. Through these FLCs, banks provide assistance to the MSE entrepreneurs in regard to financial literacy, operational skills, including accounting and finance, business planning etc. (Refer circular RPCD.MSME & NFS.BC.No.20/06.02.31/2012-13 dated August 1, 2012 )  Further, with a view to providing a guide for the new entrepreneurs in this sector, a booklet titled “Nurturing Dreams, Empowering Enterprises – Financing needs of Micro and Small Enterprises – A guide” has been launched on August 6, 2013 by the Reserve Bank. The booklet has been placed on our website www.rbi.org.in under the following path & URL:  RBI main page – Financial Education – Downloads – For Entrepreneurs (http://rbi.org.in/financialeducation/FinancialEnterprenure.aspx)

Q.41. Can the MSE borrowers get collateral free loans from banks?

In terms of RBI circular RPCD.SME&NFS.BC.No.79/06.02.31/2009-10 dated May 6, 2010 , banks are mandated not to accept collateral security in the case of loans upto Rs 10 lakh extended to units in the MSE sector. Further, in terms of RBI circular RPCD/PLNFS/BC.No.39/06.02.80/2002-04 dated November 3, 2003 , banks may, on the basis of good track record and financial position of MSE units, increase the limit of dispensation of collateral requirement for loans up to Rs.25 lakh with the approval of the appropriate authority.All scheduled commercial banks that are public/private sector banks and RRbs/NSIC/SIDBI/NETFI are the member lending institutions. (MLI) List of banks offering loans is mentioned below;List of Bank’s MSME Care Centres1.Allahabad Bank2.Bank of Baroda3.O.B.C.4.Andhra Bank5.State Bank of Bikaner & Jaipur6.State Bank of Hyderabad7.Bank of India8.Bank of Maharashtra9.State Bank of Travancore10.Canara Bank11.Dena Bank12.Indian Bank13.I.O.B.14.Punjab & Sind Bank15.P.N.B.16.Syndicate Bank17.UCO Bank18.Union Bank of India19.United Bank of India20.Vijaya Bank21.State Bank of Mysore22.Corporation Bank23.I.D.B.I.24.State Bank of Patiala25.State Bank of India26.Central Bank of India27.State Bank of IndoreLinks of State Level Bankers’ Committees contact address1.SLBC Rajasthan2.SLBC Bihar3.SLBC U.P.4.SLBC Orissa5.SLBC Andhra Pradesh6.SLBC J&K7.SLBC Gujarat8.SLBC West Bengal9.SLBC Kerala10.SLBC Jharkhand11.SLBC Himachal PradeshFee for Guarantee:The fee payable to the Trust under the scheme is one-time guarantee fee of 1.5% and annual service fee of 0.75% on the credit facilities sanctioned. For loans up to Rs.5 lakh, the one-time guarantee fee and annual service fee is 1% and 0.5% respectively. Further, for loans in the North-East Region, the one-time guarantee fee is only 0.75%.