The Ministry of Micro, Small and Medium Enterprises (MSME) has been providing subsidy under Credit Linked Capital Subsidy Scheme (CLCSS) and margin money subsidy through Prime Minister’s Employment Generation Programme (PMEGP). Provision of subsidy effectively lowers the cost of borrowing for Micro and Small Enterprises (MSEs) thereby enhancing the viability and profitability of such enterprises. There are several laws, at present, to handle insolvencies and bankruptcies. These include Companies Act, 2013, Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (RDDBFI), The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) and Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Insolvency of individuals is covered under The Presidency Towns Insolvency Act, 1909, and Provincial Insolvency Act, 1920. The existing mechanism involves time consuming processes. Therefore, Government has introduced a comprehensive Insolvency and Bankruptcy Bill, 2015 in the Parliament.

This information was given by the Minister of State, Micro, Small and Medium Enterprises, Shri Giriraj Singh in a written reply to a question in Rajya Sabha here today.

Insolvency reform accelerates resolution by consolidating existing recovery laws into a comprehensive framework for MSME relief. The document identifies that multiple, overlapping insolvency and recovery laws create time consuming processes for distressed enterprises and states that the Insolvency and Bankruptcy Bill, 2015 has been introduced to consolidate and expedite insolvency resolution; it also notes that credit support measures-Credit Linked Capital Subsidy and margin money subsidies under employment generation programmes-reduce borrowing costs and improve MSME viability.