Saturday, December 8, 2018
MSME Ombudsman Suggested
For the creation of healthy MSME sector, Banks are supposed to follow, RBI guidelines/Directives/Circulars in the right spirit but it is not happening and unnecessary delay by banks are harming MSME sectors growth.
SLIIC and EC, we have experimented but it did not yield the desired result.
Can we have MSME Ombudsman for MSME at RBI or any other institution can be created?
If govt or RBI can think in this direction will help to create healthy MSME and create a sustainable ecosystem.
Thursday, December 6, 2018
Stressed Assets in MSME-RBI move on 5/12/2018
I do not know to Welcome or criticize the move. It is too late as 1cr jobs in MSME sector are at stake.
But, When RBI is forming a Committee for looking into and submit a report by June 2019 may be a good move.
I will suggest that all professionals and academicians who may pack this committee have no exposure or very little exposure to problems of sick MSME more particularly in loan range up to 5cr to 10cr. They should be treated differently.
RBI/Central Government/State Government shall form local committees consisting of entrepreneurs, MSME associations and others so that local problems also get into the report.
But my question to RBI/Central Government/State Government has given excellent circular in March 2016 but the implementation by bankers are never monitored and in EC meeting, it gets only lip services.
Immediately RBI should have MSME Ombudsman where non-adherent banks and if staff should be punished for not following.
Entrepreneurs cum Consultant like me should have representation and innovative model like equity kind and Value creation can be thought in such a way that Pvt entrepreneurs or social entrepreneurs can look this as a business opportunity.
Sunday, December 2, 2018
Revival of Sick MSME Units:- CSR Way
It is well known that the MSME sector is the second largest employer after agriculture and employ 11 to 12cr people.
As per MSME pulse, 90000cr is in NPA in MSME but they do not project proable jobs in this sick MSME. Our estimate shows that 1cr jobs are at stake.
As, all social and welfare of society, Govt alone can not do, so they made CSR compulsory for many corporate companies and about 10000cr (as per last year) was spent on this initiative.
As one of the desires activity is employed by law, I would suggest that CSR funds should be permitted in this sick MSME as it is retaining jobs.
If today's laws, of this, is not included, can it be included in the amendment of CSR laws?
Equity kind of stake for the revival of sick MSME
Sri Ajay Shankar Prof at TERI has advocated for creating a fund by various methods to bring equity kind of investment in many large corporates for the revival with either change in investment or supporting existing by value creation.
We are proposing the same for last 2years for MSME and have already made 3 investment and in next 3 to 4 years, expect 15 to 25% return year on year basis.
As the fund required to turnaround for MSME in loan range of 1cr to 10cr will be around 5lacs for running units and cost of job retained will be @15000 against creating one job by capital investment 50000 to 300000lacs.
Handholding is very critical and the process will be a crisis, stabilization & growth management.
In the Crisis phase, our person will monitor daily activity with a focus on operational efficiency and utilization of idle capacity and focus on troubled activity solution, mainly accounts management. Our back office will prepare a marketing plan and various hurdles which can be predicated and resolving it. This phase can be 2 to 6 months.
The second phase will be stabilization which can be 3 to 12 months, where systems like MIS will be introduced, inventory management, data mining HRM and controls will be established and watched with great care to its effect on operational efficiency and increase in idle capacity utilization and cost cutting or cost efficiency.
If bankers agree, with or without further finance, growth plan will be made and implemented.
This will require 2 round of equity infusion. One of crisis stage where valuation of the asset will be very low and after stabilization where valuation can be higher than the first round. In 3 years to 5years, exit can be listing on SME Exchange, promoters buyback or other investors entering or replacing as the case may be.
Funding can be done by social entrepreneurs who are looking to change the landscape for employment or by crowdfunding, or creating an SPV for an alternative investment fund and 10 to 15% return can be generated on this.
Govt can facilitate this and no budgetary support is required.
Request all stakeholder to comment/give a suggestion.
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