OTS scheme for Micro & Small Enterprises (MSE)

Policy for Non-discretionary One Time Settlement scheme for Micro & Small Enterprises (MSE) Sector

Introduction

Micro & Small Enterprises (MSE) sector constitute a growth engine of the economy with significant contribution to GDP, exports and employment opportunities. Besides providing depth to industrial base of the economy, the MSEs also lead to entrepreneurial development and diversification of industrial sector. With the services sector dominating the MSE, and MNCs outsourcing their various requirements to Indian service providers, the scope for MSE finance has increased even further. As per the Priority Sector guidelines issued by RBI, only Micro & Small Enterprises segment will qualify for inclusion under priority sector. As per extant RBI guidelines, Micro & Small Enterprises with limits up to Rs. 0.10 Crore may be sanctioned credit facilities without any collateral security.
Reserve Bank of India vide circular RPCD.SME&NFS.BCNo.102/06.04.01 /2008 -09 dated 4th May 2009 has directed us to put in place a policy for Non-discretionary One Time Settlement Scheme for recovery of non-performing loans in MSE sector, approved by our Board of Directors.
Accordingly, Board of Directors of the bank in tune with RBI guidelines has put in place specific OTS scheme for MSE sector for original limits up to Rs. 0.10 Crore. The salient features of OTS scheme for MSE sector are as follows:

Eligibility

As per RBI stipulations, the following items come under the purview of MSE sector: -

Enterprises	Investment in Plant and Machinery/Equipment	Annual Turnover (excluding Export Turnover)
Micro Enterprise	Investment in plant and machinery or equipment is not exceeding Rs. 1.00 Crore	Annual turnover is not exceeding Rs. 5.00 Crore
Small Enterprise	Investment in plant and machinery or equipment is not exceeding Rs. 10.00 Crore	Annual turnover is not exceeding Rs. 50.00 Crore

One Time Settlement Scheme Criteria

In the case of loans granted to Micro & Small Enterprises (MSE) with original limits up to Rs. 0.10 Crore, the functionaries are permitted to allow settlement even if there is no yield subject to the bank’s existing Loan Recovery Policy.

For loans with original limits above Rs. 0.10 Crore, functionaries are permitted to allow settlement on the basis of parameters as per the bank’s existing Loan Recovery Policy.

All eligible customers should submit a written settlement proposal to the branch concerned.