RBI for setting up of rehabilitation fund for sick MSMEs

Rehabilitation of sick MSMEs could not be taken up due to non-availability of promoters' contribution in a large number of cases and there is need to set up separate fund for it, the central bank feels

Mumbai: The Reserve Bank has suggested setting up a rehabilitation fund for reviving sick micro, small and medium enterprises (MSMEs) in the wake of rising number of such units, reports PTI.

“...rehabilitation of sick MSMEs could not be taken up due to non-availability of promoters' contribution in a large number of cases, RBI has recommended to the government to set up a 'rehabilitation fund' for sick MSMEs,” RBI deputy governor Dr KC Chakrabarty said at a conclave in Mumbai.

According to RBI data, the number of sick units in MSME sector has gone up by 16% to 90,141 units in March 2011 from 77,723 in March 2010.

On the MSE (Medium and Small Enterprises) loan policy, the RBI deputy governor said, “...banks have also been advised to review and put in place MSE loan policy, restructuring or rehabilitation policy and non-discretionary one time settlement scheme for recovery of non-performing loans, duly approved by their board of directors.”

Dr Chakrabarty, during the conclave last week, also said that in spite of various measures taken by the RBI and the government, availability of credit for the sector remains a major issue.

“There is a need to implement a corporate governance code for SME sector and adoption of corporate governance framework by SMEs in India is indispensable for taking this sector to a higher growth trajectory,” he said.

Dr Chakrabarty also said there is a growing need for venture or risk capital for financing high growth potential and start-up SMEs.

Finance Minister Pranab Mukherjee in his Budget 2012-13 has proposed setting up a Rs5,000 crore ‘India Opportunities Venture Fund’ with SIDBI to enhance availability of equity to the SME sector.

Expressing concern over the flow of equity capital in the sector, the RBI deputy governor said, “At present, there is almost negligible flow of equity capital into this sector. Market regulator SEBI has permitted BSE and NSE to set up an exchange for MSMEs, which would help SMEs to raise funds from capital markets.”

According to the data provided by the 4th Census of the MSME sector, about 92.77% of units had no access to finance or depended on self finance.

It said only, 5.18% of units, availed finance through institutional sources with a further 2.05% relying on non-institutional sources.

“In this regard, the various initiatives taken by the government and RBI include adoption of the business correspondent (BC) model, relaxation of KYC norms, simplified branch authorisation, mandatory opening of 25% of new branches in unbanked rural centres etc...,” Dr Chakrabarty said.

However, the SME sector often feels the constraint of non-availability of skilled labour, he said.

The government and various state governments have been implementing a number of schemes and programs over the years.

The MSME ministry aims to train 5.72 lakh persons in the year 2012-13 through its various programmes for development of self-employment opportunities as well as wage employment opportunities in the country.


Life Exclusive
Good workmanship has its rewards

Good workmanship and deliveries brought name and fame to Finetex. The 21st part of a series describing the unknown triumphs and travails of doing international business

I followed the buses as they carried our staff to their quarters.  It took almost an hour to reach their secured ladies camp, which was located just outside the Free Zone, and was approved by the authorities.  There were only a restricted few who had access to the camp, and I was one of them.
There were couple of girls, including the first supervisor, called Malkanthi, who could converse in English; the other was arriving on the next flight couple of days later. One the procedures were all explained and formal introductions made in the camp, I returned back to inform Perera the position and began my work on preparation of documents, passports, etc to the Free Zone authorities the next day.
As was the practice, I left home little earlier than seven, so that when the bus arrived at the plant, I would be there. Piyasena and his team were already in the office and Bob Eustace had not only activated the power, but was present to reassure Perera that he was ready to extend all the help when needed.
Piyasena being a very methodical man again went through the process of interviewing each girl and making his own assessments of their knowledge and capabilities. Our plant was to be based on batch production basis and the very best operator for making a particular product was to be assigned that job only for obtaining the best finished product.
By the end of the day, we found that the first lot of 60 girls could not complete a production line; in the sense, for example, we had couple of girls who could make excellent cuffs, but we had none who could make top quality collars; likewise, other parts of the garments had to be all made ‘perfectly’ so that, when assembled, the final product would be a “perfect shirt, blouse, whatever”.  This kind of mismatch was expected, Perera said, until the entire recruited staff are assembled and tested for their actual knowledge and capacity. This inadequacy was covered after arrival of all flights!
The next lot of 79 girls was due on the 17th, when we had scheduled our production.  By this time, the first lot had got acclimatized to the camp and canteen and whole-heartedly welcomed the new group. The third and fourth lots were scheduled to arrive one day apart, on the 19th and 21st, by which time we could complete our full complement of the plant. Their arrivals and locations in the camp went on without a hitch.
The processing of documents for the entire batch continued without a moment’s rest; these had to be submitted immediately upon arrival; as the Free Zone officials had to complete their recording before passing the documents to the immigration authorities so that the local ID (also called the pataka) had to be issued to every single employee, which they had to keep in their possession all the time.
Our wage bill had started the moment the staff arrived in the country and everyone was busy doing his/her job to set the whole operation in motion.
But I had not finalized any immediate order for processing in the plant. I had the option of taking a contract job, which is what I had planned initially for a few months before accepting direct orders. The choice was to speak to my good friend Aziz at Singleton and/or Sheru at Palmon, both of whom had specialized in making a variety of shirts.
A word or two about contract jobs would be nice. The main contractor let us say Singleton, in this instance, may have received an order for 50,000 shirts from a single client in the US, for dispatch to various stores in New York, Atlanta, Baltimore, San Francisco and Florida. This would have been based on the fabric, style and design of the shirt approved by the client.  Singleton would have sourced the raw materials like cotton sheeting (from India) and accessories (mostly from Hong Kong). Once the goods are in-house, they (Singleton) may start production in their own plant and give sub-contracts to others, like they did with us, for a job work.  For the sake of easy understanding, Singleton confirmed the order on us, and sub-contracted us to make 12,000 shirts @ $15 a dozen. Our only responsibility was to supply our own threads (cotton, in this case) and make the shirts per approved design and deliver the goods, ironed and packed in their polybags, all ready for shipment. They gave us 15 days to deliver the above lot, considering the fact that we had just started, and we may have some hiccups.
We overcame our troubles, sometimes relocating the staff from one particular operation to another and delivered the goods in about 12 days, earning a total of $12,000 as our sub-contracting labour charges, minus the cost of threads. During the process of manufacture, Singleton had their inspectors testing for quality and workmanship and ensuring that we were consuming the fabric in line with their estimates. As the work was progressing midway, we began to get feelers from others if we could do their jobs, as well.
Piyasena and his team worked in tandem and we received good appreciation and orders from our neighbours.  Without our capital investment, in terms of importing raw materials and accessories, we simply ensured the supplies of these locally and met their exacting demands and earned our keep.

All our staff members had good experience on Juki machines; some had good knowledge of Pegasus; many others were good only for laying and cutting departments, while others were in ironing, packing; most had experience of thread cutting (removing loose threads, etc), which meant standing for at least eight hours at a stretch!
Finetex was the first plant in the Free Zone which had large canteen facilities for staff to have their meals; it had adequate provision for a great number of rest rooms for men and women separately and a sick-bay, in case someone was under the weather, so that they could take rest before resuming work.
Juki’s main competitor was Singer, whose local representatives got in touch with our senior partner and was willing to give special terms. They wanted us to lead in the use of Singer machines; I think we decided to buy some 100 machines or so from them. Delivery was promised ex-stock (almost within 10 days) but what could we do without supporting personnel? We asked for delivery some six weeks later, because of the process of recruitment, obtaining of visas, and getting seats in overcrowded lights from Colombo.
Some six months had elapsed since Piyasena Perera had commenced production and he worked generally for more than 10 hours every day. I have never seen anyone as conscious as he was in running a plant in my life, so knowledgeable and hardworking.
Zubair was regular in his visits to the factory and we had regular meetings.  We felt a change in the atmosphere; Piyasena’s visit to his family was overdue. We sent him off on his mission to get the additional staff to match the Singer machines we had ordered.
For next seven days I was acting as the production manager also, thanks to the unstinted cooperation that I received from Malkanthi, Chandra, Ruby and a couple of others. For me, too, generally it was a minimum of 10 to 12 hours a day in the plant, in addition to the driving time to cover some 50 km each way.
We began to accept orders from reputed importers who visited our plant; also the Free Zone would recommend a visit to our plant, as it was the newest and built with comprehensive facilities. There was not a single garment importer who had not visited our plant even though they may be regular buyers from others. Our workmanship and deliveries brought name and fame to our door-step.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)

 You may want to read more:




5 years ago

Very nice article. True, good, quality workmanship is the key to success - in all industries. Investing on the right talent and facilities for productivity of the employees is well worth it.

Public Interest Exclusive
The story of two soldiers who took on the Supreme Commander

Commander Ravindra Pathak (retd) and Col Suresh Patil (retd) who have been campaigning against excess defence land being taken by President Pratibha Patil  are well known activists in Pune.  Let’s see how far their tenacity takes them in this campaign which is connected with the highest chair in this country

Col Suresh Patil (retd) saw death at close quarters when six of his colleague officers and 67 men were killed in the J&K sector in the 1971 Indo-Pak War. Commander Ravindra Pathak (retd) too was challenging death, as he was given the task of clearing under-sea mines to make Chittagong Harbour operational, immediately after the same war.

Today, both say they were gifted with a second life and hence, decided since then to give it back to the society, once they hang their boots, somewhere in the early 1990s.

It’s a story of two soldiers and one mission – to fight against encroachment of defence land by the present Supreme Commander of the Armed Forces, who is none less than the President of India, and it’s Pratibha Patil, this time round.

Col Patil fired the first salvo in August 2011 when he got a whiff of President Patil  “grabbing’’ a prime defence land in Khadki cantonment of Pune, admeasuring a whopping 2,42,000 sq ft as against her eligibility of getting only 4,498 sq ft of an existing government bungalow in any part of the country, as her retirement home.  

Col Patil, who formed the `Justice for Jawans’ organisation for ‘serving’ and ‘retired’ soldiers and officers who suffer many difficulties in terms of accommodation and other issues, took up the President’s retirement home issue, rather intensely.

His initial war cry to halt this unjustified “capture’’ of land when the President’s soldiers and officers in the same city were being denied their rightful official accommodation due to lack of space, did not have much impact. It fell on deaf ears of the authorities as well as the media. In the meanwhile, Defence Estate officers of Pune were making hectic trips to and fro Pune-Delhi to make way for Pratibha Patil to legally get this vast tract of land, studded with two `living’ bungalows.

Col Patil appealed to other defence NGOs to join in the campaign. That’s how Comm Pathak came into the picture. Since 2008, he was also working towards the cause of pension related issues of retired soldiers on behalf of the Delhi headquartered Indian Ex-Servicemen Movement (IESM).

After the sixth pay commission, the IESM had taken up a campaign nationally to demand ‘one rank one pension’ as consecutive pay commissions recommended different criteria for soldiers and officers who may have completed the same years of service; belonged to the same group; and held the same rank; but drew different pensions depending on the year they retired.

Protests manifested in the form of 25,000 soldiers and officers returning their medals to the Pratibha Patil, since 2010. As per the protocol, the President of India in his/her role as Supreme Commander of the Armed Forces is required to personally accept the ‘returned’ medals as a traditional form of protest. Ms Patil to date has not given an appointment and hence, the medals are lying in the Delhi office of IESM. Hence, the ire against Pratibha Patil was already there in the eyes of IESM members.

Comm Ravindra Pathak
In early 2011, Comm Pathak decided to join Col Patil and ever since the campaign has picked up momentum. They collected incriminating evidence against her proposed retirement home through RTI. However, they got a luke warm response from the media until this week’s story in Moneylife made national waves and went viral on the social network. Suddenly the controversy is raging through all corners of the country.

Col Suresh Patil (retd) is otherwise known as an environmentalist and has been involved in greening some parts of the cantonment. The two kilometre Bogra Walking Plaza that has been turned into a beautiful landscaped garden was once a stinking nallah. Similarly, he has greened another two kilometre stretch of a nallah bank in the Pune Municipal Corporation area, under his Green Thumb NGO. More details can be found at www.greenthumbindia.org.  Commander Pathak is active on this blog: http://iesmorg.blogspot.in/

(Vinita Deshmukh is a consulting editor of Moneylife. She is also an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte. She can be reached at [email protected])



Ashok Malkani

5 years ago

Hurrah for Cmdr Ravindra Pathak and Col. Suresh Patil. These two servicemen are the pathbreakers, who have taken courage to speak out their mind, even against the President.

For too long have servicemen been cowed down by authority and reduced to " Yes Sir, Yes Sir, Haanjee Sir" wallas.
Let the President not be allowed to grab defence lands. We have another shameful Adarsh scam in the making.


5 years ago

Any person after death req 2ft*6ft land. Whether President or Prime Minister or Poor Countryman at native place.
Why cant she go to her native n stay n set example to all Ministers


5 years ago

We have a wrong system of President elected by the corrupt politicians. It will help get a better President if he/she is elected by direct vote from the people. At least we will not get dumb Presidents like Pratibha Patil.

Anna should add this to his agitation.


5 years ago

Hats off to these soldiers. Hope they are not threatened or further put to risk or harm in their endeavours to help improve matters in India.

Typically, in such situations, local pressures and other sorts of methods will be employed by the back-door. Nothing is sacred.\\


5 years ago

On one end of the presidential spectrum we have Dr Rajendra Prasad who on retirement donated all his worldly possession and spent rest of his life in an Ashram. Now we are witnessing shameless act . Prestige of Presidential chair has been demeaned
by the present incumbent. Sad day for the nation.


5 years ago

Charity begins at home and no one is above law. For whatever service the President, whomever it be should gracefully accept what is legitimately given and set an example for the nation to follow.

Just as the duty of other is fraught with ,so is acquiring anything which is not ones due is deadly sin.
"Yatha Raja thatha Prajaa"

P M Ravindran

5 years ago

Kudos to Cdr Pathak and Col Patil! May their tribe increase!

Sandeep Patil

5 years ago

Dear Pratibha,

Please read the following quoting :

"Rivers do not drink their own water, nor do tree eat their own fruit, nor do rain clouds eat the grains reared by them. The wealth of the noble is used solely for the benefit of others!

"When the wealth in the house increases, when water fills a boat, throw them out with both hands!"

'How much should we provide for our heirs?'
Ask yourself 'are we taking away from them the gift of work? - A source of happiness?
The answer is given by Warren Buffett:
"Leave your kids enough to do anything, but not enough to do nothing!"

S Suchindranath Aiyer

5 years ago

The "Highest" Chair has been brought low like most others. In 21st Century India, there is no such ting as a "high chair". As for SoniaJi's PresidentJi, she is a true Head of the Indian State. Govt. extravagance, profligacy and corruption are reflected in galloping inflation, curtailment of freedom of expression, suicides, and the more subtle abrogation of the Constitution than Schedule 9.



In Reply to S Suchindranath Aiyer 5 years ago

well said..


5 years ago

Hats off to these 2 martyers like Anna Hazare. Because of these selfless Indian citizens, we are still functioning as a democracy. Govt. is still not got over Adarsh and trying its best to safegurad corrupt politicians who shamelessly still holding public offices. All the best to these brave solders of the land and thanks to Money LIfe to bring these courrpt high office bearers to books. All the best.

Mr Rohinton Khambata

5 years ago

President Pratibha Patil is misusing her position & grabbing land for her own bunglow is indeed very shameful.The Govt. or the Supreme Court must take action against her & must not allow this unjustfication of her demands.


5 years ago

It would be helpful if an update on the latest situation, preferably with photographs, could please be provided.

Interim, here is one more article on the subject from Delhi:-


Dr Ratna Magotra

5 years ago

A retirement home for the President is a perfect idea when merit and ability were the sole criteria for selection to the highest post. The idea needs another look now when the sole criteria is loyalty to the ruling party, merit no longer a consideration. One only needs to visit Congress Nagar in Amrawati and decide whether the current President needs a retirement home. She must be stopped from grabbing the defence land.

Vaibhav Dhoka

5 years ago

One can lable this as STUBBOURNESS.When the highest officer is contravertial what can we expect from others to those in power.


5 years ago


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)