RBI/201112/171RPCD.SME&NFS.BC.No.19/06.02.31/201112September12,2011 TheChairman/ManagingDirector/ChiefExecutiveOfficerAllScheduledCommercialBanks(excludingRegionalRuralBanks)Madam/DearSir,GuidelinesforRehabilitationofSickSMEUnits

Pleaserefertoparagraph5ofAnnexure IofourcircularRPCD.NO.PLNFS.BC.57/06.04.01/20012002dated January16,2002on captioned subject.Norms forgrantof reliefsand concessionsbybanks topotentiallyviablesickSSIunits for rehabilitationas furnished inAppendixIIof theabovecircularwere recently reexamined. Itwasobserved thatall thebankshavemigrated to theBaseRateregimewitheffectfromJuly1,2010andreferencestoPLR/BPLRarenomoremeaningful.

2. Asperextantguidelineson interestrates,banksarenotallowed to lendbelowBaseRate.However, in terms of para 2.3.1.3 ofMaster CircularDBOD.No.Dir.BC. 5 /13.03.00/201112datedJuly1,2011on'InterestRatesonAdvances',incaseofRestructuredloansifsomeoftheWCTL,FITL,etc.needtobegrantedbelowtheBaseRateforthepurposesofviabilityandtherearerecompenseetc.clauses,suchlendingbyScheduledCommercialBankswillnotbeconstruedtobeaviolationoftheBaseRateguidelines.

3. Further,videRPCDCircularSME&NFS.BC.No.102/06.04.01/200809datedMay04,2009,allScheduled Commercial Banks have been advised to put in place their own Restructuring/Rehabilitationpolicy for revivalofviable/potentiallyviable sickunits/enterprisesdulyapprovedbytheBoardofDirectors.

4. Consideringtheabovedevelopments,theReliefandConcessionstoviable/potentiallyviablesickunitsunderrehabilitationprescribedinAppendixIIofourcirculardatedJanuary16,2002standwithdrawn.

5. Banksareadvised toput inplace theirownBoardapprovedRestructuring/Rehabilitationpolicyforrevivalofviable/potentiallyviablesickMSEunits/enterprises.

6. Pleaseacknowledgereceipt.Yoursfaithfully(C.D.Srinivasan)ChiefGeneralManager

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Rural Planning & Credit Dept., Central Office, 10th Floor, Central Office Building, Shahid Bhagat Singh Marg, P.Box No. 10014, Mumbai 400 001

Tel:22661602Fax:22621011/22610943/22610948Email:cgmincrpcd@rbi.org.in