Sick Micro, Small and Medium Enterprises in Country

As per the data compiled by the Reserve Bank of India (RBI) from the scheduled commercial banks, there were 77,723 sick micro and small enterprises (MSEs) in the country as at the end of March 2010. Information in respect of medium enterprises is not being collated by the RBI. As per the quick results of Fourth All India Census of Micro, Small and Medium Enterprises (MSMEs) for the reference year 2006-07, of the total MSMEs registered/entrepreneurs memorandum filed up to 31st March 2007, 4,80,946 enterprises were found closed. The State-wise position of sick MSEs and closed MSMEs is given at Annexure. The main reasons for sickness/closure are inadequate and delayed credit, obsolete technology, marketing problems, infrastructural constraints, managerial deficiencies, etc.

Financial assistance, by way of debt restructuring, including fresh loans, for the rehabilitation of sick MSE is provided by the primary lending institutions (PLIs), including commercial banks, which provide credit to the MSEs. For this purpose, the RBI has issued detailed guidelines to banks in January 2002 on detection of sickness in MSE at an early stage and taking remedial measures and for rehabilitation of sick MSEs identified as potentially viable. RBI has also issued guidelines on 8th September 2005 on debt restructuring mechanism for small and medium enterprises (SMEs) which relate, inter alia, to viability criteria, prudential norms for restructured accounts, provision of additional finance and time frame for working out the restructuring package and its implementation. Further, the RBI has advised all scheduled commercial banks on May 4, 2009 to apply the RBI’s guidelines on debt restructuring optimally and in letter and spirit and put in place their own non-discretionary one-time settlement (OTS) policy for the MSE sector. The Ministry of Micro, Small and Medium Enterprises (MSME) is implementing various schemes/programmes across the country for the promotion and development of MSMEs, including generation of employment opportunities for people including those affected by closure of units. The major schemes, inter alia, include Prime Minister’s Employment Generation Programme, National Manufacturing Competitiveness Programme, Cluster Development Programme, Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Performance and Credit Rating Scheme and Market Development Assistance Scheme.

State/Union Territory-wise number of sick MSEs as at the end of March 2010 and closed MSMEs as per the quick results of Fourth All India Census of MSMEs for the reference year 2006-07

This information was given by the Minister of State (Independent Charge) for Micro, Small and Medium Enterprises, Shri Dinsha Patel in a written reply to a question in the Lok Sabha .