FCIK criticises RBI Jammu office for deepening MSME distress; Demands action beyond ritual meetings
STC NEWS DESK
SRINAGAR, NOVEMBER 11 (STC): Failure of the Reserve Bank of India’s (RBI’s) Regional Office, Jammu, to deliver tangible relief to distressed MSMEs despite successive meetings, repeated assurances and longstanding credit and rehabilitation mechanisms has annoyed the Federation of Chambers of Industries Kashmir (FCIK).
Reacting to the 72nd Meeting of the Empowered Committee on MSMEs for J&K and Ladakh, FCIK said routine exhortations on liberal financing, credit guarantees and revival had displaced scrutiny of actual implementation.
“After 72 meetings, disclose how many enterprises were rehabilitated, financing deficiencies corrected and decisions implemented. Meetings held cannot be equated with results achieved,” FCIK stated.
The Federation said RBI’s Regional Office must ensure that local economic conditions inform national banking policy, pursue corrective action on credit bottlenecks and recommend region-specific interventions.
“Having witnessed industrial distress for decades, the office must explain what it recommended, what action followed and why the same unresolved issues keep returning to its agenda.” FCIK asked.
FCIK said enterprises, particularly in Kashmir, had lost thousands of working days to turmoil, shutdowns, restrictions and natural calamities while interest, idle wages and statutory liabilities accumulated. Working capital was consumed by unavoidable expenses, while underfinancing, delayed assistance and costly emergency borrowings in the shape of overdraft with interest up to @18% pushed viable businesses into distress.
“Has the Regional Office placed a comprehensive assessment of disruption-related debt before the RBI Governor? What special measures has it recommended? Enterprises cannot remain indefinitely trapped between unserviceable debt and the loss of productive assets and family properties.” FCIK observed.
The Federation demanded meaningful resolution of legacy stress through rehabilitation, realistic restructuring and affordable settlements reflecting borrowers’ repayment capacity, the causes of distress and the need to preserve viable businesses.
Expressing concern over complaints that banks allowed MSME accounts to become NPAs without timely intervention under RBI’s Framework for Revival and Rehabilitation, FCIK questioned the Regional Office’s monitoring.
“The framework requires early identification of stress and corrective action. Why do entrepreneurs report that meaningful engagement begins only with a recovery notice? Where are the assessments of rectification, restructuring and viability?” asked FCIK.
FCIK demanded a bank-wise account of eligible enterprises identified before NPA classification, considered for corrective action, restructured, revived or referred for recovery, with reasons for rejecting rehabilitation.
“What action has the Regional Office secured where banks bypassed these safeguards? Protection confined to paper offers no protection at all.” FCIK observed.
The Federation said NPA classification was often followed by SARFAESI notices and e-auction announcements while rehabilitation or settlement requests remained unresolved.
“Name and shame practices continued without giving distressed MSMEs a fair opportunity for rehabilitation or settlement, making revival even harder. In a closely knit society, public recovery campaigns damage an entrepreneur’s reputation, business ties and chances of revival.”
FCIK also questioned repeated appeals for TReDS adoption without securing effective participation by government departments and PSUs purchasing from MSMEs.
“What has the Regional Office done to secure UT Government directions for their registration and time-bound acceptance of eligible invoices? Seller registration alone cannot unlock finance: public buyers must participate and accept invoices before those receivables can be discounted.” observed FCIK.
FCIK demanded disclosure of departments and PSUs on-boarded, invoices accepted, amounts financed and acceptance timelines, with deadlines to address gaps.
“Repeated references to TReDS at meetings do not release money trapped in unpaid bills. The Regional Office must help remove the administrative barriers preventing its use.”
The Federation further questioned its efforts to secure local access to debt adjudication for J&K borrowers compelled to pursue proceedings in Chandigarh at considerable expense and inconvenience.
Acknowledging that establishing a Debts Recovery Tribunal falls within the Central Government’s authority, FCIK demanded disclosure of the Regional Office’s recommendations and follow-up for a tribunal in J&K or regular circuit sittings in Srinagar and Jammu.
“A remedy must be practically accessible, particularly when an entrepreneur’s productive assets and home are at stake.”
Recalling its 2005 engagement with then RBI Governor Dr. Y. V. Reddy along 15 Deputy and executive Governors in Srinagar, FCIK said substantive dialogue had helped secure concessions and strengthen monitoring through Empowered Committees. Yet these committees along the State Level Inter-Institutional Committee and its subcommittee, intended to rehabilitate sick units, failed to deliver and were subsequently abandoned.
“What happened to earlier concessions and rehabilitation mechanisms? Why did they disappear or become ineffective and what functioning alternatives replaced them?” it asked.
Urging the RBI Governor to review the Regional Office’s performance, FCIK sought a time-bound programme for legacy-debt resolution, enforcement of rehabilitation safeguards, effective TReDS participation and accessible debt adjudication.
“The Regional Office must answer for the gap between RBI’s stated objectives and entrepreneurs’ experience. Enterprises that survived decades of disruption deserve effective intervention. Another meeting ending with another assurance is no longer an acceptable response,” FCIK concluded.
(Straight Talk Communications)
