The intention of the government to support the MSMEs in their stressed time is evident from the strict timelines prescribed in the notification issued by the Reserve Bank of India.
Since the present government came into power, it has focussed on the support to MSMEs. The government is well aware that the MSMEs have more than 30% contribution in the GDP of the country with the second largest employment generator and will play a major role in making India a developed and Atmanirbhar Bharat.
The intention of the government to support was clear when they used the powers given to the central government under Section 9 of the Micro Small and Medium Enterprises Development Act 2006. The central government has the power to issue a notification for the purposes of facilitating the promotion and development and enhancing the competitiveness of MSMEs.
Using this power the Ministry of MSME issued a notification on May 29, 2015, namely “Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises” to provide a simpler and faster mechanism to address the stress in the accounts of MSMEs and to facilitate the promotion and development of MSMEs.
However, the Reserve Bank of India took note of it and found that there are certain provisions in the said notification which may not be compatible with the regulatory guidelines on Income Recognition, Asset Classification and Provisioning norms notified by the RBI.
The central bank, therefore consulted with the central government, MSME Ministry and issued the revised notification on March 17, 2016 for the Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises.
