The government of India has taken several steps to make the MSME sector exciting and vibrant. The policies are formulated to help the MSME units in launching the business successfully.
Not only that, the policies help the units to sustain in the long-term.
However, every business can’t run successfully for a long time. Due to distinct reasons, it stumbles and falls.
The units fall sick and sink ultimately. The reasons of sickness could be many.
Sometimes, it becomes sick because of internal causes such that planning, implementation, and production.
Sometimes, it happens because of uncontrollable external reasons such that infrastructural and financial bottlenecks, marketing constraints, etc.
A sick MSME unit affects not only the owners but puts a negative impact on national resources. It also becomes a cause of unrest sometimes.
Reviving a sick MSME It requires a detailed process to revive a sick MSME unit. Though it is quite a complex process, here is a list of important steps.
- Identifying the sickness at the initial stage.
- A detailed resolution plan or a list of recovery measures is prepared based on the symptoms and early warning signals. It is presented to a committee of Corrective Action Plan.
After that, an application is submitted to the CAP. It includes the following things:
- Audited account report of the MSME which includes Net Worth.
- A comprehensive list of liabilities including the liabilities owned by Central or State Government. It includes unsecured creditors as well.
- Types of stress faced by the MSME.
- Possible remedies to revive the unit.
When the committee receives an application for CAP from the lenders or bank, it should send a notification to the MSME.
The information that is needed from the MSME is:
- It should respond to the application or it should make a representation for the same.
- It should tell the details about all liabilities including the State and Central Government.
The MSME should respond within two weeks of submission. If it is not done, then the committee takes one-sided decision.
The commit takes a decision to adopt under the CAP and tell the enterprise about it.
The implementation of the plan should be completed within the following timelines:It is a brief description of the procedure. Actual procedure may vary on a case to case basis.
- If CAP is rectification, then 30 days
- If CAP is restructuring, then 90 days
If at all it is decided to recover CAP, the recovery measure is initiate as early as possible. The account is transferred to SAM team. It is a brief description of the procedure. Actual procedure may vary on a case to case basis.