MSME Current Affairs - 2020

CII sets up COVID-19 Rehabilitation and Relief Fund

The Confederation of Indian Industries has set up funds to assist rehabilitation of micro, small and medium enterprises. The fund is to be raised from the members of the confederation.

Highlights

The MSMEs are the most affected sectors due to the outbreak of Corona Virus. This is mainly because of the steps taken to contain the virus like Lock Down, travel bans, closure of theatres, malls and educational institutions.

The GoI has launched several measures to help MSME sustain in the scenario of Lock Down.

GoI Measures

The GoI has allowed late repayment of loans by the MSMEs. The Government will suspend Section 7, Section 9 and Section 10 of the IBC code for six months if the situation is to continue till April 30, 2020.

Section 7

Under Section 7 of the Insolvency Bankruptcy Code, the creditor or the Government may file an application to initiate insolvency procedure.

Section 9

Corporate Insolvencies are initiated under this section

Section 10

The section gives powers to defaulting company to approach an adjudicating authority to declare it insolvent.

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Recapitalization of Regional Rural Banks approved by Union Cabinet

The Union Cabinet under the chairmanship of PM Modi on March 25, 2020, approved the recapitalization of regional rural banks (RRB) to improve the capital to risk weighted assets ratio.

Highlights

The Committee approved the continuation of recapitalization of RRBs. In order to achieve this the GoI has provided a minimum regulatory capital for another, 2020-21. The recapitalization funds are being allocated to those banks that are unable to maintain minimum CRAR (Capital to Risk weighted Assets Ratio) of 9%. The CRAR for a bank is fixed by RBI.

Benefits

An improved CRAR will help the rural banks to meet their credit requirements in rural areas. The RRBs should allocate 75% of their credit to priority sector lending. The RRBs focus on small and marginal farmers, micro and small enterprises, weaker sections of the society and rural artisans

Scheme of Recapitalization

The Scheme of Recapitalization of RRBs was launched in 2011. It was launched on the recommendation of Dr K C Chakrabarty Committee.

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