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ENTREPRENEURSHIPDEVELOPMENT (MODULE-

II
1-B)
Edi
tedby
:MANAVSIR
(
Facult
y:PMEC&ResearchSchol
ar:
Ber
hampurUni
ver
sit
y)

Sicknessi nSmal lEnt erprises.


Causesandsy mpt omsofsi ckness–cur esofsi ckness.
Gov t.pol ici
esonr evivalofsi cknessandr emedi almeasur es.
Causesandsy mpt omsofsi ckness:
Indust rialSi ckness
Whati sI ndust ri
alSi ckness?Ani ndustr
ialuni tt endst oshowsignsoffinanci
aldi
str
ess
starti
ngwi th:
shor tter ml iqui ditypr oblems;
r ev enuel osses;
oper ati
ngl osses; and
mov ingi nt hedi rectionofov eruseofext ernal credit
.
unt ilitr eachesast agewher eitisov erbur denedwi thdebtandnotbei ngableto
gener at esuf ficientf undst omeeti tsobligat i
on.
Whi cht ypeofuni tsar esi ck?
1.ToaLay man: -Asi ckuni tisonewhi chi snotheal t
hy.
2.ToanI nv est or:-Itisonewhi chisnotgi vingdi v i
dends.
3.ToaBanker :-Iti sauni twhi chhasincur redcashl ossesint
hepr ev
iousyearandis
aboutt or epeatt hesameper formanceincur rentandf oll
owingyear
s.
4.ToanI ndust riali
st:-Itisauni twhi
chismaki nglossesandabouttoclose.
Indust ri
alSi cknessDef initi
on:

Incommonpar l
ance,asickuni tisonewhi chi snotheal thy.Financialinst
it
uti
on
considersaunitsi
ckwheni tfail
stomeeti t
scont ractualobligati
on.
AccordingtoSickI
ndustrialCompani es(SpecialProv i
sions)Act ,1985, asi
ckindustr
ial
undertaki
ngmeans, “
anindust r
ialcompany( registeredfornotl esst hansevenyears)
whichhasatt heendofanyf i
nanci alyearaccumul atedlossesequal t
oorexceedingits
enti
renetwor t
handhasal sosuf f
er edcashlossesi nsuchf i
nanci alyearandthe
fi
nancialyeari
mmedi at
elypr ecedingsuchf inancialyear.”

1.Accor
dingt
oRBI
:-“
Asi
ckuni
tist
hatwhi
chhasi
ncur
redacashl
ossf
oroney
earand
i
slikel
ytocont
inuei
ncur
ri
nglossesf
orthecurr
entyearaswel
lasi
nthef
oll
owi
ngy
ear
andtheuni
thasanimbal
anceinit
sfi
nanci
alst
ruct
ure.

2.Accor di
ng to SICA,1985:“ A uni
twasdef i
ned as“indust
ri
alcompany(being a
companyr egi
steredfornotlessthansevenyear
s)whichhasattheendofanyf
inancial
yearaccumul atedlossesequalt o orexceedi
ngitsentir
enetwor t
handhasal so
suff
eredcashl ossesinsuchfinanci
aly
earandthefi
nanci
alyeari
mmediatel
ypr
eceding
suchfinanci
alyear”

3.Def i
nit
ionaccordi
ngtocompaniesAct
,2002:
-Sickindustr
ialcompanymeansan
i
ndustri
alcompanywhi chhas– Accumulat
edlossesinanyf i
nanci
alyearwhi
char e
equalto50per centormor eofi
tsaver
agenetwor thduringfouryearimmediat
ely
precedi
ngsuchfinanci
aly
ear
Fai
l
edt orepayi
tsdebtswit
hinanythr
eeconsecut
ivequar
terondemandmadei
nwr
it
ingf
or
i
tsrepaymentbyacredit
orofsuchcompany

Signal sandSy mptomsofI ndust ri


alSickness
Commonsy mpt omsofi ndustrialsicknessi ncludef ail
uretopayst atutoryli
abil
iti
esl i
ke
prov i
dentf undsandE. S.I.contributi
ons, f
ailuret opayt i
melyi nstall
mentofcapi taland
i
nt erestorloanst akenf r
om financi ali
nstit
ut i
onsandt hroughpubl i
cdeposi ts,i
ncr ease
i
ni nv entor
ieswi thalargenumberofsl owornonmov i
ngitem, highr ateofr ej
ectionof
goodsmanuf actured,l
owcapaci t
yutil
izati
onandf requentindustrialdispute.
Indust ri
alunit
smaybecomesi ckatdi ffer
entst ages.Somei ndustrialunitsare‘born
sick’someachi evesicknessandsomeoft hem hav esicknesst hrustupont hem.
Followi ngfactorsmaycauset hesi gnal soft hei ndustri
alsi
ckness–

1.Fai luret oPaySt atutor yLi abi l


it
ies: Financi almanagementcausesf ai
luretopay
statut oryl i
abiliti
esl i
kepr ov identf undsandE. S.I.contri
bution.
2.Incr easei nI nv ent ori
es: Poori nv entor ymanagementi nr espectoffi
nishedgoodsas
wel lasi nput sputuni ti
nat roubl eandt her esultissicknessi nvent
ori
es.
3.Fai luret oPayLoan:I ndust ri
al unitsf ailt
opayt i
melyinstallmentofcapitaland
i
nt erestonl oanst akenf rom f inanci alinstit
ut i
onandt hroughpubl i
cdeposits.Iti
sa
maj orsy mpt om ofi ndust ri
al sickness.
4.Rej ect ionofGoods:Duet ot hedecl aimi ngi nt echni
calef f
ici
encyrej
ectionofthe
goodsi npossi bl e.
5.Ot her s:
(i
)Deal i
ngi ncapaci tyutili
zat ion
(i
i
)Nonsubmi ssionofdat at obanksandf i
nanci al i
nst
it
utions.
(i
i
i)Fr equentbr eakdownsi npl antsandequi pment s.
(i
v)Ir regul ari
tyi nmai nt
ainingbankaccount s.
(v
)Fr equentt ur nov erofper sonnel i
nt hei ndust ry.
(i
)Per sistingshor tageofcash.
(i
i
)Wi despr eaduseofcr eativeaccount i
ng.
(i
i
i)Det er i
oratingf inancial ratios.
(i
v)Cont i
nuoust umbl eint hepr iceoft heshar es.
(v
)Del ayi nt heaudi tofannual account .
(v
i)Degr adationofempl oy eemor aleanddesper ationamongt hemanagementt eam.
(v
ii)Del ayi npay mentofst atut orydues.
Ext
ernalCauses:

•Ext
ernalproblemsrelat
ingtobanksandotherfi
nanciali
nst
it
uti
ons:
a)Under-
fi
nancingbybanks
b)Over-
fi
nancingbybanks
c)Del
ayindisbursementofloans
d)Del
ayindetectionofearl
ysymptomsofsickness
e)Del
ayindecisionandactiontor
ehabi
li
tat
etheunit.
f)Ot
hers.

•Sicknessmadebygov ernment:
a)Changeingov er
nmentpoli
cies
b)Delayedinpaymentofbil
l
sbyt hegover
nmentdepar
tment
s
c)Red-tapi
sm bygover
nmentof f
ici
als
d)Others.

•Externalprobl
ems:
a)Raw- materi
als
b)Power
c)Mar ket
ing
d)Labour
e)Fi
nance
f)Others
•Otherext ernalpr oblems:
str
ikes, bandhs, insur gents,extorti
onsetc.
1)Ener gycr isis
2)Irr
egul arSuppl yOfI nputs:-
3)Infr
ast ruct ur
al probl emsliket r
ansportbot
tl
enecks;
4)Shor tageofwor kingcapi t
al /li
quidi
tyconstr
aint
s;
5)Recessi on.
6)Arti
f i
cial economi cconst r
aint s
7)OfficialorGov ernmentPol icy
8)Changesi nTechnol ogy;
9)Changei nconsumerbehav iour;
10)Fire, f
lood, othernat ur
alcal amit
ies
11)Ot herf ami l
ypr obl ems
12)Soci alpr oblemsl i
ke

ConsequencesofI S:
Indust r
ialsi cknesshasbeenr esul ti
ngi nser i
ousconsequencesi nanunder dev eloped
l
aboursur pluseconomyl i
keI ndia.TheseconsequencesofI Sinclude:
1)Adv er se i mpacton soci ety:-Aggr av ati
ng empl oymentpr obl em,Lack ofl abour
i
nt ensiveness, highunsat isf actionr ateduet ocl osureofindust r
ial units.
2)Fearofi ndust r
ialunrest: -Wi despreadl abourunr est,highunempl oymentr ate,low
product iv ity,unf avour of t rade uni on due t o closur and t hr eatening i ndust ri
al
env ir
onmentoft hecount ry.
3)Wast ageofr esources:-Wast ageofhuger esourcesinvestedi nt hesesi ckuni t
s,lack
ofi nfr
ast r uct uref aci
li
ties,bl ockofcapi tal equi pment .
4)Adv er sei mpactonr elat eduni ts:Adv er seimpactonr elateduni tsthroughbackwar d
and f or war dl inkages.Fore. g.Channelbr eakdown bet ween i ndust ries;Impacton
suppl i
er s; Impactondi stribut ors;
5)Adv er seef fectoni nvest or&ent r
epr eneur :-Low sati
sf acti
onofi nvest or
;Negat iv
e
effectont hesamel i
nenewent repreneur ;Eff ectont hegrowt hr ateofi ndustry,duet o
widespr eadcl osur eofunit s.
6)Lossest obanks&f inanci alinst i
tuti
on: -Causi nghugelossest obanksandot hert erm
l
eadi ng i nst i
tut i
onsand l ocki ng up hugef undsi nt
ot hesesi ckuni ts.Fore. g.l ow
recov eryr ateofbanks&i nst it
ut i
on;lossi magei nthemar ket;lackoff i
nancialsuppor t
fornewi ndust ries.
7)Lossofr ev enuet oGov er nment :-Resultinghugel ossofr evenuet obot hCent re, Stat
e
andLocal gov t.
RemedialMeasur estodealwiththeproblem ofsi
ckness:(CURESOFSI CKNESS)
I
ndustri
alsicknessi saseriousproblem f
acedbyt hecount r
yatpr esent.Thi
saf f
ected
theheal
thofi ndustri
esworkingunderbothpubl i
candprivatesector.Thusinmeant i
me
vari
ousincentives,concl
usions.dol
esetc.hasbeenof f
eredt othesesi ckuni
tsforthei
r
revi
val
.Thesemeasur esforrevi
valandrehabi
lit
ati
onarediscussedbel ow:
St
epst
akenbybanks
 Gi
vi
ngadequat
ewor
kingcapi
tal
whent
her
eisshor
tage

 Recov
eryofi
nter
eastr
educedr
ate

 Def
ini
ngt
hespeci
alcel
li
ntheRBI

 Ar
ranget
hespeci
alCommi
tt
eeofst
atel
evel
int
hel
ocal
branchf
orl
i
nkbet
ween
agency

Pol
icyf
ramewor
koft
heGov
ernment
 SWOTanal
ysi
sofi
ndust
ry

 Li
ber
ali
zat
ionofsi
cki
ndust
ri
al

Concessi
onsbyt
heGov
ernment
 Gi
vi
nghi
ghf
aci
l
iti
est
olar
gei
ndust
ri
est
otakeov
ert
hesmal
lsect
orf
orr
evi
val

 Hi
ghl
i
ber
ali
zat
ioni
nter
msoff
inanci
alr
athert
hani
nter
vent
ion
 I
ntr
oducet
heschemef
orsi
cki
ndust
ry

st
epsf
ordet
ect
ingsi
cknessear
ly
  
Cor
rect
iveact
ionst
akenbyRBI

Thei
ndust
ri
ali
nvest
mentbankofI
ndi
a
 Setupt
heI
RCI
(I
ndust
ri
alReconst
ruct
ionCor
por
ati
onofI
ndi
a)

 Conv
ertI
RCIi
ntoI
RBIi
nMar
ch20,
1985

 Conv
ertI
RBIi
ntoI
IBIMar
ch27,
1997

1.Measur est akenbyBanks: -


I
nor dertor evi
v eandr ehabilit
atethesicki ndustri
aluni
ts,thecommer ci
albanksgr
anted
vari
ousconcessi onstot heseuni tswhichi ncl
ude:
1.Grantingaddi ti
onalwor kingcapi t
al;
2.Recov eryofi nter
estatr educedr at
e;
3.Freezingapar tofunder standingintheaccount soft heseunits;
4.Sickindustrialundertakingcel l
;
5.State-
levelinterinst
ituti
onal commi ttees;
6.ast andingco- ordi
natingcommi t
tee(constit
utedbyRBI )from coor
dinat
ingvar
ious
i
ssuesr elatedt ocommer cialbanksandt ermleadinginstit
uti
ons
7.defi
ningt hespeci alcellwithinrehabil
itati
onfinancedivisi
onofIDBI;

2.Measur est akenbyGov ernment :-


Inordert odealwi thprobl em ofI S,thegov ernmentl aiddownv ariousgui del
inesOct
1981f orguidanceofadmi nistrati
vemachi neri
es.Themai nf eaturesoft hesegui deli
nes
are:Feat ures:
a)Theadmi nist
ersmi ni
st ersingov ernmenthasbeengi venspeci f
icr esponsi bil
i
tyfor
taki
ngr emedi alacti
onandpr eventi
ngI S.
b)I nor dert ot akecor rect i
veact ionforpreventing i
ncipientsi ckness,t hef i
nancial
i
nstitutionwi llstr
engthent hemoni toringsystem andmayt akeov erthemgtofuni tf
or
i
tsrev ival.
c)whenev erthebankandot herf i
nancialinsti
tut
ionfai
lstopr eventsi cknessofasi ck
unitther eafterreporti
ngt hemat t
ert ogov t
.theyr ecoveryt heiroutstandi ngdueswi th
normal bankingpr ocedure;
d)Inor dertonat ional
iset heunder t
aking,themgtoft heuni tmaybet akenov erunder
thepr ov i
sionsofI ndustr
ies( Dev el
opmentandRegul ati
on)Act ,1951f or6mont hperiod;

3.Concessionspr ovidedbytheGov ernment:-


Thegov thasal somadepr ovisi
onf orcertai
nconcessionsforassi
sti
ngt her evival
processofsickunits.Theseinclude:
a)Taxbenef i
tt oheal thyuni
twhot akingoversickunit
sforit
srevi
val
(amendment sof
i
ncomet axacti n1977byaddi ngsec72A) .
b)Intr
oduct
ionofmar ginmoneyschemef orrevi
valofsi
ckunit
sinJan1982;
c)Intr
oduct
ionofl iberali
zedmarginmoneyschemei nJune1987forhi
ghli
beralizat
ions
i
nt ermsoff inancialrathert
hani nt
ervent
ion.Theamtofassi st
ancewasr aisedfrom
20,000to50,000.

4.I
ndustr
ialI
nvest
mentBankofIndi
a(I
IBI
):
I
nor dertorevi
veandrehabi
li
tat
esickunitsgov
ernmentsetupt
heI
RCI(
indust
ri
al
reconstr ucti
oncor porat
ionofindi
a)withitsauthorizedcapit
alof2.5crore.
Features:
a)Forpr ovi
def inanci
alassi
stance,manager i
alandt echni
calassi
stance;
b)Secur eassi st
ancefrom otherf i
nancialinsti
tuti
onsandgov ernmentagenci
esfor
revi
valofsi ckuni ts;
c)Prov idemer chantbanki
ngser v
icesforamal gamat i
on,mergeretc;
d) Conv ersi
on of I RCIi nto a statutory corporati
on named I RBIin March 20
,1985(aut horized capit
alofRs200 cr ores& pai d up capi
talofRs50 cr or
es)e)
Conv ersionofI RBIintoII
BIinmar ch27,1997

5.Stepsf orEarlyDet ectionofSickness:


1)I nordert odet ectsicknessoft hoseco’ sf orthosewhoar enotcov eredunder
SICA,1985,correct i
vest epshasbeent akenbyRBI:Feat ur
es:a)Gi vi
ngadv i
cet othe
banksi nr espectofanyi ndust
r i
aluni t;b)Moni t
oringcertainindustr
iest hroughits
standingcommi t
tees;
2)ExiceLoan:I ntroducti
onofexci seloanpol icybygov ti
nOct ober1989forthegr antof
exciseloant oweakandsi ckindustrialunit
.Aspert heschemet heselecteduni tswil
l
becomeel i
gibl
ef orexciseloanupt o50%oft heexcisedutypaidbyunitforlast5y ears

6 . T A K E O V E R P O L IC Y
•REDUCINGLI
ABILI
TIES
•GRANT LOANS AT CONCESSIONAL RATES
•PRIORI
TYINSUPPLYOFRAW 
MATERI
AL
•PROFESSI
ONALSERVICES
•TAXEXEMPTION
•MERGER

PREVENTI VEMEASURESANDROLEOFCONCERNI NGAGENCI ES


Thepr eventionofsi cknesscannotbet hesoler esponsibi
li
tyofanyoneagency .I
tist
o
becheckedatv ariousst agesbydev el
opingcloseandcont i
nuousdial
oguewi t
heach
otherthroughef fect ivecommuni cati
on.Thepr eventivemeasurescanbet aken
i
ndi vi
duall
yorj ointlybyhav ingdiscussi
onsandconsul tat
ions.I
npreventi
ngt he
sickness,theref ore, theroleofthefoll
owingagenci eshasbeeni denti
fi
edwi t
h
respectiv
edi stinct ion
•Term Lendi ngI nstituti
ons
•Commer cial Banks
•Entrepreneur
•Gov ernment
Theseagenci escanef fecti
vel
yst em t
hesicknessi ftheymakeuseofsi gnalsand
sympt omst hatar egener at
edbyt heindust
rialunitinitsworki
ngandbyusi ng
i
nf or
mat i
onandr epor t
ingsystem ofimportantkeypar ametersoftheindustr
ial
enterpri
se.

1.Rol eofTer m LendingInstitut


ions
Thet askoft het ermlendingi nsti
tuti
onstoav ertsicknesscommenceswi ththe
i
dent if
icati
onoft hesickunit.Manyi ndustr
ialprojectsarebornsi
ckbecauseei t
her
properappr aisal hasnotbeendone, ormar ketsurveyhasnotbeencar ri
edoutwhi l
e
sanct i
oningt erml oantoanent r
epreneur.Theroleoft ermlendi
nginst
ituti
onsinthe
prevent i
onofsi cknessmaybedi scussedasunder :
Appr aisalofManagement
Thet ermsl endercanf or
estallmor ethanfif
typercentchancesofsickness,ifhe
evaluatespr operlythemanagementoft hepr oj
ect.Acompet entandvigil
ant
managementcanbeexpect ednotonl yt of i
ndsol uti
onst ot hedayt odaypr oblemsof
theuni t,butal sot oant i
ci pat et hepr obl emst obeandt aket imel yst epst oav oidt hem.
Managementev aluat i
oni sadi fficul tt askbutwi thexper i
ence, at er ml enderwoul d
dev el opt hesi xthsenset odi ffer ent iat ebet weenadesi rableandundesi rabl e
ent repr eneur .Thet er ml endercanal way sobt ai nr epor tsoft hepr ospect iv ebor rower s
from banker sandot herknownsour ces, par ti
cul arlyr egar dinghi sant ecedent sand
busi nessr eput at ion.
Banni ngI ndust riesNotHav ingScope
Ther ear ecer taini ndust rieswhi char eont hedecl ine, irrespect iveoft hest ateof
economy .Thesoundmanuf act ur er swi thav isionmayt akemeasur eswel linadv ance,
toav er tanydi sast ert hr oughdi v er sificat ionormoder nizat ionast hesi tuat ionmay
requi re.Ot her s, eitherobl iviousaboutt hel ikel ychangeorunr esponsi vet oi t,wi tht he
resul tt hatsoonerorl atert hei ndust rial under taki ngsdev el
opsi ckness.I nsuchacase,
thet er ml endi ngi nst itutionscanr endert i
mel yhel pbyi dent i
fyingt hosei ndust r
iesor
i
ndust rial pr oduct s, wher esi cknessseemst obeemer gingduet odecl i
nei ndemand, or
wher esuppl yhasout strippeddemandper cept i
bl y,andt opubl icizet hi sinf or mat i
on,
theycanhel pi nt woway s,
First, tof or ewar nanddi ssuadepot ent ial ent repr eneur sf rom st eppi ngi ntot hese
i
ndust ries, ori mposebanoni ndust riesnothav ingscopebyput ti
ngt hem onbannedl i
st,
Second, av oidi ngcr eat i
onofaddi tional capaci ties.Whenev eranent repr eneurmar kets
onl yonepr oductf orapar t
icul arcust omer ,theuni tr unsi ntopr obl emsbecause
cust omer schanget hei rdemandi nmi dst ream.I nsuchacase, mar ketsur veycanbe
conduct edbyt het er ml endi ngi nst itut ionsandpr ev entt hepot ent ial ent repr eneur snot
toest abl i
sht hoseuni t,orchanget hel ineofpr oduct i
oni ncaseofest abl i
sheduni t.
Machi ner y&Equi pment
Att imes, t hepr ojecti sbasedonsecondhandmachi ner y .Suchapr oj ectcaneasi ly
becomesi cki ft her econdi tioni ngoft hesecond- handequi pmenti snotsat i
sfact orily
doneort het echni cianst oi nst al ltheequi pmentar enotav ailabl eatr equi redt ime.Ext ra
effor tshas, ther efor e, tobeexer cisedbyt hef inanci ngi nst itutionst oensur et hatt he
second- handequi pmentwoul dhav ear easonabl elongl ifeaf t
err econdi tioning, andi n
caseofanydef iciencyi nt heequi pment , readyassi st ancef rom t hesel lerswoul dbe
av ailabl e.
Sat isf act or yI mpl ement at i
on
Timeel ementi sal limpor tanti nt hei mpl ement at i
onofapr ojectandt het erml enderhas
toensur et hatal l av oidabl edel ay satt heappr ai sal stageanddur ingt hedi sbur sement
oft hesanct ionedassi stancear eeschewedscr upul ousl y .Pr ompt sact iondur i
ngt hese
stageswoul dnotonl yr esul tint hei mpl ement at ionoft hepr ojectwi t houtov errunsand
onschedul e, butwoul dal soest abl ishpr operr appor tbet weent het er ml enderandt he
ent repr eneur ,itissoessent ial fort het erml enderwhi lemoni t
or ingt hepr ojectl ater.It
mustbeemphasi zedt hatpr ompt nessi snott obeachi ev edatt hecostofpr oper
appr ai sal oft hepr oject ,orbymaki ngdi sbur sement swi thoutobser v i
ngt heusual
precaut ions.I nf act , agoodappr ai sal i
st heot heri mpor tantst ept hatat er ml enderhas
tot aket of or est all sicknessi nt heuni t.
2.Rol eofCommer cial Banks
Acommer cial banki sofv i
tal impor tancet oani ndust r
ial uni tasi tpr ov i
dest ot heuni t
l
iqui dr esour cesneededt okeept heuni tgoi ng.Thei rev erydaydeal ingwi thsi ckuni ts
enabl est hem t obecl osert ot heoper at ionoft heuni tandr eadt hei rpul se.Thus,
commer cial bankscandet ectear l
ywar ningsi gnal ofsi cknessand, thust ake, l
ike
sui t
abl eandt i
mel yact i
ont opr ev entt hei nci denceofsi ckness.Themai nel ement sof
thesi cknesspr ev ent ionsy st em att hebankl ev el areasf ollowi ng:
Car ef ulPr operAppr ai sal
Acar ef ul pr operappr aisal oft hepr ojectensur esnotonl yitssuccessbutt hebanker '
s
i
nt eresti sal sosaf eguar ded.Wi tht heshi ftf rom secur i
t yor ient edl endi ngt opur pose–
orient edl endi ng, thest udyoft hev iabi lit
yhasbecomemor ev ital whi lef inanci nga
project .Iti s, somet i
mes, foundt hatt hecr edi tappr ai sal capabi li
t i
esofbr anchmanager s
hav ebeenabsol utel yi nadequat ebecauseofr api dexpandi ngbr anchesofcommer ci al
banks.Most l
yt heyappl yaconser vat iveandt radi t
ional appr oachwhi l
eassessi ngt he
requi rementofwor ki ngcapi tal finance.Asar esul t,uni t sar eunderf inancedandar e,
ther efor e, forcedt ooper ateatsubopt i
mum l ev el.Mor eov er, thet echni cal and
mar ket ingf easi bilityoft hepr oj ectar et akenf orgr ant edwi thoutdoi nganal yti
cal st udy
att hei rownl ev el .Banksshoul dr ef uset of inancet hosepr oject swhi char enotv iabl e,
andassessmentofwor kingcapi tal requi rementshoul dbedonewi tht heco- oper ationof
terml endi ngi nst i
tut ions.Ther eshoul dbecont i
nuoust rainingpr ogr ammef orbr anch
manager st oupgr adet hei rappr ai sal capabi lity.Theef for tsshoul dbemadet oappr ai se
thepr oj ectonmer itsal oneandi nav eryobj ect i
vemanner ,wi thoutaccept ingany
exter nal inf luence.
Timel ydi sbur sement
Bankshav et oensur et hatwor kingcapi tal financeshoul dbeav ailabl ei nt i
measf aras
possi bl et oav oidov errunsi npr ojectcost .Though, itisobser vedt hatsomet i
mest he
delaymayoccurduet ot heent repr eneurwhof ailst of ulfillall thef or mal i
ti
essuchas
submi ttingal l ther equi reddocument sandr epl yi
ngt ot hequer i
esoft hebr anch
manageri nt i
me, yeti thasbeennot icedt hatt hef aul tlieswi tht hebankerwhohast o
obt aint heper mi ssi onofandappr ai sal f
rom di fferentaut hor i
ties, andl aysst ressmor e
onaccept anceofsecur i
tyast hesecondchar gef r
om t erml endi ngi nst ituti
onsonf i
xed
asset s, orper sonal guar ant eeagai nstper sonal asset s.Anydel ayi ndi sbur sementmay
i
nv itesev er al ot herdi f fi
cul tiesexcepti ncr easei npr oj ectcost , suchast heent ryofnew
compet i
t or s,t henon- av ailabi li
tyofscar cer awmat er ials, del ayi nsuppl yoff i
nal pr oduct
i
nt ime.
Feedbackf rom Commer ci alBanks
Itmaygoal ongwayi ndet ect ion/ pr ev ent ionofi nci pientsi cknessi fthet erml enderand
thecommer cial bankerr eal i
zet hatt heyar et het wowheel sonwhi cht hepr ojectcar t
hast opr oceedt osuccessandt hatsuccesscanbeachi evedonl yi fbot hoft hem
funct ioni nuni son.I foneoft hem t riest ost rengt heni tsposi ti
onatt hecostoft heot her,
orkeepsawayanyi nf or mat ionaboutadv er sedev elopment si nt heuni t,ev entual l
ybot h
willsuf ferasal sot heuni titsel f.Ther ei sadi reneedf orco- oper ationbet weent het wo
l
ender sf r om t hev er yi ncept i
onoft hepr oject , andi thast obecont inuedt hroughoutt he
l
ifeoft hepr oj ect .
War ningSi gnal s
Ifthedr awi ngsi nt heaccountexceedt heper mi ssi bledr awi ngpowercont inuousl yov er
aper iod, thebankercansaf el yconcl udet hatt hecust omeri sshor toff unds.I fthe
accountr unsconsi st ent l
yi nexcessoft hesanct ionedl imi t,thecust omermi ghtbe
i
ndul gingi nov er -tradi ng.I ft hebi ll
sdr awnbyt hesel leronhi sbuy ersar eretunedunpai d,
i
tmaybepoi nt ert ot heunaccept abi lityoft heend-pr oduct soft heuni tint hemar ket .It
canaswel l besai dt hatagoodl ookatt hel edgeraccountofacust omer( bank' s)byan
exper iencedbankercant hrowaf l
oodofl ightont hest at eoft hebusi nessoft he
cust omer -atl east ,rev eal enoughf ort hebankert okni thi sey e- br ows.
Mar ketI nt elligence
Theappr ehensi onsr ai sedbyt hescr ut i
nyoft hel edgeraccountcanbecount er–
checkedbyt hebankerwi thmar keti nt elligence, whi chhehasper for cet obui ldi nhi s
syst em ofwor king.Onl ywhenandi ft hemar ketr epor tscor r
obor atet hebanker 'sear li
er
appr ehensi onsr aisedbyt hel edgeraccount ,thebankerneedcommenceact iont o
arresti mpendi ngsi ckness.Ani nnocuousv isi ttot heuni tbyt hebankermi ghthel pi n
cryst allizingt hepi ct ur ef ur ther .
Stemmi ngSi ckness
Discussi onswi tht heent repr eneurcoul dbet hef irstst epi nt hedesi reddi r
ect ion
prov idedt hei nt ent ioni st ohel pt heent repr eneurt ocomeoutt hedi fficulti
es.Anyundue
pressureatthisst agetor
ecoverevenapar tofthebanker '
sduesand/ ortostrengthen
thesecur i
tyisboundt ocompli
catetheexi sti
ngunsat isfactor
ysit
uationandal so
promptt hecustomert okeepbankt heinformationr egardingadversedev el
opment s.
Normal l
y,provi
sionofadditi
onalfi
nance/ credi
t,reductionintheprescribedmar ginand
somel atit
udeinr epaymentoftheov erdueswoul dhelpinr emedyi
ngi ncipi
entsickness.

3.TheRol eoft heEnt r


epr eneur
Inaway , i
tshoul dbet hesol er esponsi bi l
i
tyoft heent repr eneur ,whocommences,
i
mpl ement sandmanagest hepr oj
ect , toav er
tsi cknessi nt heuni tsetupbyhi m.Thi s
cannor mal l
ybedonei ft heent repreneurdoeshi shomewor kpr oper l
ywhi ledr awingup
thepr oject,ifhepay sadequat eat tent iont ot hedef icienci espoi ntedoutbyt he
appraisingof fi
cersoft hef inanci alinst ituti
ons, ifhesel ect st hesuppl ier
sofmachi nery
andpr ocesscar eful
ly,ifheappoi ntst hef inancial andot herst affint i
me, i
fheaf fect s
economyt okeept hepr ojectcostwi thint heor iginal est i
mat esandi mplement sthe
sameaccor dingt ot het imeschedul e.Themai nel ement soft hesi cknesspr eventi
on
system att heent repreneurl evel areasf ollows:
ManagementBoar d
Thei ndust ryshoul dhav eaboar dwi thcompet entper sonsf rom al ldisci
plinesneededt o
runtheuni tsuccessf ull
y ,appoi ntady nami cchi efexecut ivet oi mpl ementt hepolicies
formul atedbyt heboar dandensur eapr opersecondl ineofdef ensebyappoi nti
ng
professional go-getters.Andabov eal l, atthef irstsignofanyadv ersedev elopmenti n
theuni t,heshoul dtakehi sbankerandt erml enderi ntoconf idence.For tunately,t
heol d
thi
nkingoft hebanker st o"putont heheat "whent hebor r
ower sar eindif f
icult
ies,is
beinggr adual lyreplacedbyadesi ret ounder standt hepr obl emsoft heent r
epreneur
whenhef acescr i
sisandt ofindsol utionssot hatt heuni tfunct i
onsmoot hly.
Partner sinEnt erpri
se
Thet erml ender sconsi dert hemsel v esaspar tner sint heent er pri
ses( asshownbel ow)
beingmanagedbyt heent repr eneurandar ef ullyconsci oust hatt her ecov eryofthei r
l
entf undsdependont hecapabi lit
yoft heuni ttogener atesur pluses.

1.Solv
encyofI ndi vidual
2.Securit
yofCol lateral
3.Prof
itabil
i
ty&Vi abili
tyofPr oject
4.Entr
epreneurial Capabili
ti
es
5.Part
nershipResponsi bil
it
ies
6.AwarenessorSi cknessWar ning
I
nthecir
cumst ances, theent r
epreneurcanf reel
yconfinehi
sprobl
emstothelender
s
andmakeuseoft heirexper tadvicei naver
ti
ngsicknessbef
oreiti
stool
ate.

4.TheRol eoft heGov ernment


TheGov ernmentcanhel pincont rolli
ngsicknessbynotmaki ngsuddenandf requent
changesi nt heindustr
ialpolicies.I thast obeappr eciatedthatsettingupofani ndust r
ial
unitisani nvestmentdeci si
on, whi chhast ot akei ntoaccountf urt
herr etur
ns.
Suddenchangesi nindust r
ialpol icy
Whensev eralchangesar emadesuccessi velyint hei ndustri
alpolicybyt hegov ernment ,
i
tnotonl ymaydi scouragenewi nv estmentbutal soupset sfurtherplanscausi ng
si
cknessi nt heestabli
sheduni ts.Wi t
hdrawal ofsubsi diescanal sor esultinsickness.It
wouldbeonl yinthef i
tnessoft hingsi fthet erml ender s,whoar eexpect edt oknowt he
pulseofeachi ndustr
yf i
nancedbyt hem, aret akeni ntoconf i
dencebyt hegov ernment ,
beforeef f
ect i
nganymaj ormodi fi
cat i
onsi nt hei ndust r
ialpol
icy.Thef inancial
i
nst i
tut
ionsandt herepresent ativesofi ndust rycanal sobepr ompt edt ocomet ogether
occasional l
ywi t
horwi thoutgov ernmentpar t
icipat ionwi thav i
ewt odiscussingt he
problemsoft heindustryingener al orofanypar ti
cul arindustryandev ol
v i
ngsol uti
ons
i
ncl udingr ecommendat ionst ot hegov ernmentt omodi fyi tsexi stingpol ici es.
Resi stancet ochange
Thel awasi tstandst odaydoesnotempowert het er ml ender st omakechangesi nt he
managementofanassi steduni tev enwhent heyar econv incedt hatinci pi entsi ckness
i
nt heuni tisent ir
elyduet ot hei ncompet enceand/ ordi shonest yoft heexi st i
ng
managementandi tisappar entt othem t hatwi thoutachangei nmanagement ,theuni t
woul dsoonbecomechr onicall
ysi ck.St rangel yenough, whent hemanagementi s
effi
ci entandhonest ,anychangessuggest edi nt hemanagementbyt hel ender sar e
readilyaccept edbutamanagementwhi chi snotabov eboar dusual lyr esi st s
managementchanges.Powert ochange
Itwoul dbeagr eat erhel pi ftheapext erml ender sar ev est edbyt hegov er nmentwi th
power st omakemanagementchangesi nuni tsassi stedbyt hepubl icf inanci al
i
nst it
ut ionwheni tispr ov edt oitssat i
sfact iont hatsi cknessi nauni thasseti nandt he
samecanbeat tri
but edent i
rely/mai nlytodef i
ci entmanagement .Inpar ti
cul ar,ter m
l
ender smaybeaut hor izedt oappoi ntinuni tssuf f
er i
ngf rom i nci pientsi cknesswhol e
ti
mef i
nanci al
, t
echni cal andmar ketingdi rect ors.Suchdi rect or s, ofcour se, woul dhav e
tobeempower edt or epor ttothef i
nanci al inst i
tut i
onsandal sogi veni mmuni t
yf rom
penal tiesf oract sdonei ngoodf ait
h.Ter ml ender scanber equi redt opr epar eapanel of
exper iencedper sons, whocoul dt akeupsuchchal lengi ngassi gnment s, whi ler etired
offi
cer sf rom thepubl i
candpr ivatesect orwi thadequat ebackgr oundcoul dbeone
sour cef orbui l
dingupsuchapanel .I nor dert ogetr i
doft hedi seaseofi ndust rial
sicknessandr est oret heheal thoft heaf fect eduni ts, therei sani mper at iveneedt hat
thegov ernmentandt her elatedagenci esshoul dcomef orwar dt omeett hechal lenge.
Theyshoul dadoptst rategi candpr agmat i
cappr oach.Asf araspossi ble, st ernl egal and
economi cmeasur esshoul dbeadopt edt ocheckf urtherspr eadofsi cknessandassi st
theuni tint heirrehabi l
itationbi d.Moder nizat i
onandr ational izat i
onshoul dbe
commonl yused.Theseuni tsshoul dbepr essur izedandper suadedt out ilize
sophi st i
cat edmachi ner yandi nnov at i
vet echnol ogy .Besi des, bankst hef inanci al
i
nst it
ut ions, shoul dal socomef or war dtor escuet heseuni t st hr ought hei rl iberal loan
policies.Thesei nst it
ut ionsshoul dkeepawat chov ert heway soft heut il
izat i
onof
awar dedl oanf acili
ties.Banksshoul dalsoassesst hepr ogr essofsuchuni ts,whi char e
facingcr isis,from t imet ot ime.I tispr esumedt hati fsuchast at eofaf fai ri snot
checkedandt imel yact ioni snott akent hei ncr easingi ncidenceofi ndust rial sickness
willfurt heraggr avat et hesi tuationandhampert hegr owt hofi ndust rial sect or.

Gov
ernmentpol
ici
esonr
evi
val
ofsi
cknessanr
emedi
almeasur
es
Gov ernmentPoli
cytoDealwi t
hI ndustr
ialSickness:
Thepol i
cyframeworkinrespectofmeasur est odealwit
hthepr oblem ofi
ndustri
al
sicknesshasbeenlaiddowni ntheguideli
nesi ssuedinOctober1981( whi
chwer e
subsequentlymodif
iedinFebruary1982)f orguidanceofadministrat
ivemini
str
iesof
theCent r
alGover
nment ,
StateGov ernments,andf i
nanci
ali
nstit
utions.

TheCent ralGovernmenthassetupaBoar dforIndust


ri
alandFinanci alReconstr
uct i
on
(BIFR)witheffectfr
om January12,1987i npursuanceofenactmentoft heSICA—Si ck
Industr
ialCompani es(Speci
alProvisions)Act,1985.Thisi
samaj orstepfor
i
nterveningatanear l
ystageanddet ecting,
preventi
ngaswellast akingamel i
orat
ive,
remedial,andsuchot hermeasureswhi chneedt obetakenwit
hr espectt osickand
potenti
allyvi
ablecompanies.

TheI
ndust
ri
alReconst
ruct
ionBankofI
ndi
a(I
RBI
)setupi
n1985hasi
nit
iat
edv
ari
ous
stepsforcheckingt hegrowthofindustr
ialsi
cknessandhel pingi nindustri
alrev
ival
.The
IRBIwast akenov erbytheIndustri
alInv
estmentBankofI ndiain1997.I tfuncti
onsas
theprinci
palcreditandreconstr
uctionagencyforindustr
ialrevi
v al.Asignif
icant
measur etakendur i
ng1986wast hesetti
ngupofSmal l
Indust r
iesDev elopmentFund
(SIDF)intheIDBI.Thisismeanttopr ovi
despecialfi
nancialassistancet othesmal l
-
scalesector.

10.3BOARDOFI NDUSTRI ALANDFI NANCI ALRECONSTRUCTI ON( BIFR)


Boar dofi ndustrial andFi nancialReconstruction(BIFR)wasest abli
shedbyt heCent ral
Gov ernment ,undersect i
on3oft heSickIndust r
ialCompani es( Special pr
ovisions)Act,1985
andi tbecamef ul ly358Pr oj
ectManagementoper ati
onalinMay ,
1987.
BIFRdeal swi thi ssuesl i
ke
 Rev iv
al andr ehabi li
tat
iononsi ckcompani es,
 Wi ndingupofsi ckcompani es,
 Inst it
utional financet osickcompani es,
 Amal gamat ionofcompani eset c.
BIFRi saquasi judi cial body.Ther oleofBIFRasenv i
sagedi ntheSICA( SickIndustri
al
Compani esAct )i s: (a)Secur i
ngt hetimelydet ecti
onofsi ckandpot ential
lysickcompani es
(b)Speedydet ermi nat i
onbyagr oupofexper tsoft hevariousmeasur estobet akeninrespect
oft hesickcompany
(c)Expedi ti
ousenf orcementofsuchmeasur esBIFRhasachai rmanandmayhav eamaxi mum
of14member s,dr awnf r
om v ari
ousf iel
dsincludingbanking, l
abour ,account ancy,economics
etc.
Itfuncti
onsl ikeacour tandhasconst itut
edf ourbenches.

Undert hepr ovi


si
onsofSi ckIndustrialCompanies(SpecialProvi
sions)Act ,1985[SICA] ,
t he
referencemadebyt hesickindust r
ialcompanyisdecidedbyt heBoar df orIndustr
ial&Fi nancial
Reconst ructi
on(BIFR)TheLegi slat
ionisbasical
lyandpr edominantl
yr emedi alandamel iorati
veinso
farasi tempower sthequasi j
udi ci
albody,BoardforIndustri
alandFinanci alReconstruction
(hereinafteral
sorefer
redt oasBI FR)tomakeappr opriatemeasuresf orr evi
valandrehabi li
tat
ionof
potent i
all
yv i
abl
esickindustri
al companiesandf orl
iquidati
onofnon- viablecompani es.

I
facorporat
edebtorisindi
ffi
cul
tyi
tisl
ikelythathewouldapproachtheseni
orlendersforsome
r
ehabi
li
tat
ion,waiv
erofcompoundorpenal inter
est,
fundi
ngoftheinter
estduesonazer ocoupon
r
ateoratconcessi
onalter
ms.Itwoul
dpr epareaschemeofar r
angementorrehabili
tat
ionplanwi
th
t
heassist
anceofex per
tsoranadvi
soraftermakingrefer
encetoBIFR.

WhetheraCompanyhasbecomesi ckcanbedeci dedonlyafteraccountsar


ef i
nal
isedandaudi
ted.
Aft
ertheaccountsarefi
nali
sed,BoardofDi rector
softhesickindustri
alCompanymustmakea
ref
erencetoBIFRwithi
n60day safterfi
nali
sat i
onofaccounts.IfBoardofDir
ector
sareofthe
opini
onthattheCompanyi sasickindustr
ialcompany,BoardofDi rect
orcanmakear efer
enceeven
befor
ef i
nal
isat
ionofaccounts.[
secti
on15( 1)ofSICA].

Whocanobt ai
nr eli
efunderBI FR?
Appl i
cabili
tyofandCov erageofSICA–TheActex tendstowhol eofI ndia.TheActappl iest o

Indust ri
alUnder t
akings’ asdef i
nedinsect i
on3( 1)(f
),whichst atest hat;
The‘ i
ndust rialunder taki
ngmeansanyi ndustri
alunder t
akingper tainingt oindust r
yli
st edi nschedule
toIndust r
ies( Dev elopmentandRegul ati
on)Act.Thisschedul ecov erspr acti
cal l
yall
indust r
iesand
hence, theActi nrealityappli
est oallindustr
ies,exceptshippingi ndust ry.TheActappl iest o
Gov ernmentaswel l aspr i
vateunder t
akings.Howev er,theActdoesnotappl yt ocooper ati
ve
societiesanduni tsownedbyat r
ust.TheSI CAdoesnotappl yt osmal l
scalei ndustr
ies( SSI
).SICA
hasov err
idingef fect–Pr ovi
sionsofSI CAhav eov err
idi
ngef fectov erpr ov i
sionscont ainedi nall
otherlaws, memor andum andar ti
cleofcompanyandanyot heri nstrument ,exceptpr ov isi
onsof
ForeignExchangeRegul ationAct( FERA)andUr banLand( CeilingandRegul ation)Act( ULC)[ sect
ion
32(1)ofSI CA].

Crit
eriaforSeekI
ndustri
alCompany?
(a)Itshouldbeanindustr
ial
company
(b)I
tshouldberegi
ster
edforatl
eastfi
veyears–Acompanyusuall
ymakesl
ossesi
nini
ti
alyear
s
andhence,ini
ti
all
ossesdonotmeanthattheindust
ri
alcompanyi
ssick.
(c)Attheendoffi
nanci
alyear
,accumulat
edlossesshoul
dbeequalt
oormor
ethani
tsenti
renet
worth

Whatar et her el
iefsonr efer
encet oBI FR?
UnderSI CAcr edi t
orsofasi ckcompanyar epreventedf rom enforci
ngt hei
rremedi esinacourtof
l
awsubj ecttost ayormor atori
um int hef ol
lowingcl assesofpr oceedings
a.Suitforr ecoveryofmoney
b.Suitforenf orcementofanysecur ity
c.Suitforenf orcementofanyguar anteei nrespectofanyl oanoradv ancegr antedtothecompany
d.Execut i
onagai nstcompani espr operties
e.Proceedi ngsf ordistressagainstsuchpr oper t
ies
f.Si
mi l
arot herpr oceedingsagai nstsuchpr operties
2.Nocr editorsoft heCompanycani nit
iateanyki ndofl egalproceedingsagai nstt
heCompanyor
againsttheasset soft heCompanyf orr ecov eryofitsduesi ncasesuchCompanyi sbef
ore
BIFR/AAI FRundert hepr ovi
sionsofSI CAt i
llpendencyofsuchr efer
enceort il
l obt
aini
ngleaveof
BIFR/AAI FRt odoso.
3.Howev erthepr iori
tyofclaimsdoesnotgetadv er
selyaffected

RoleofBI FR?
Onr eceiptofref
erencef r
om theCompany ,BI
FRwi lli
nqui
reanddet er
minet hatwhetherappl
icanti
s
sickindustri
alcompanyornotandaf t
ersuchdet er
minati
on,itmayappointoper at
ingagency(e.
g.
panel ofbanks,publi
cfinanci
al i
nst
it
uti
ons)tocomeupwi thDraftRehabi
li
tationSchemeas
preparedinconsultati
onwi t
ht heSi
ckIndustr
ialCompanyf orthepurposeofr evi
valand
rehabili
tat
ionofsuchcompanyori tmayaskf orwindingupofSickIndustr
ialCompanyi fi
tsnot
possibletorevivethecompany .

ScopeofourSer v
ices?
1.Fi
lli
ngref
erence/applicat
ionforonbehalfoft heCompany
2.Prepar
ati
on,assist
ingandConsul ti
nginDr aft
ingofRehabi
li
tat
ionScheme(
DRS)
3.Advisi
ngmeasur esinthetermsofCor porateRestr
uctur
ingundert
heDRS
4.Prepar
ati
onofModi f
iedDraftRehabil
i
tati
onScheme
5.Fi
lli
ngMiscell
aneousapplicati
onswithBIFR

Pr
ocedur
e:
Reporti
ngt oBI FR
I
nquirybyt heBI FR
Rehabili
tat i
onofSSIuni te
Viabi l
it
yofsi ckSSIuni t
s
Reliefandconcessi onforrehabil
itat
ionofpot
enti
all
yviableuni
ts
Del egationofpower
Rel
iefandconcessi onunderr ehabil
it
ati
on
I
nt erestduesoncashcr editandtermloans
Unadj ust edinter
estdues
Ter ml oans
Wor ki
ngcapi talter
ml oans
Cashl osses
Wor ki
ngcapi tal
Cont i
ngencyl oanassistance
Fundsf orstartupsexpenseandmar ginforwor
kingcapital
Promot er’scontri
buti
on

Detai
ls:
Repor t
ingtotheBI
FR
TheBoar dofDir
ect
orsofasi
ckindust
ri
alcompanyisrequi
red,
byl
aw, t
or eportt
hesicknesst
o
theBIFRwithi
n60daysoffi
nal
isat
ionofaudi
tedaccounts,
fort
hef
inancialyearatt
heendof
whichthecompanyhasbecomesick.BIFRhasprescr
ibedafor
matforthisrepor
t.Whil
e
repor ti
ngbyacompanyofi t
ssi cknesst ot heBI FRi smandat or yaspert hepr ov isionsofl aw,
anyot heri nter est edper son/ par tycanal sor epor tt hef actofsi cknessofacompanyt ot heBI FR.
Suchi nterest edpar tiesmaybet hef inanci al inst itut ion/ bankt hathasl entl oant ot hecompany ,
theRBI ,theCent ral /St ateGov er nment s.TheBI FRhaspr escr ibedadi f ferentf or matf ort he
repor ttobesubmi ttedbysuchi nter est edpar ties.Whenacompanyhasbeenf inancedbya
consor ti
um ofbanks, itist heLeadBankt hatshoul dr epor tt ot heBI FRaboutt hesi cknessunder
adv icet oot herpar ticipat i
ngbanksi nt heconsor ti
um.
Enqui rybyt heBI FR
Whenacasei sr ef erredt ot heBI FR, itisv er i
fiedbyt heRegi st raroft heBI FRast owhet hert he
fact soft hecasef al lswi thint hepr ov isionsoft heSi ckI ndust rial (Speci al prov isions)Act ,1985.
Ifso, theBI FRaccept st hecaseandnot ifi
esadat ef orhear i
ngt hecase.
Forr ehabi litatingasi ckuni t,cooper ationofv ar iousconnect edagenci esi samust .Thi sco-
or dinat ioni sachi ev edbyt heBI FR.
TheBI FRi nv itest her epr esent at ivesoft hei nf or mantsi ckcompany ,ther epr esent ativ esof
concer nedf i
nanci al inst itutionsandcommer ci al banks, repr esent ativesoft heCent ral/ State
Gov ernment s, tradeuni onr epr esent ativ eset c. ,tot hehear i
ngandi nqui ryismadeundersect ion
16oft heAct .
Af tert hehear i
ng, theBI FRi t
sel fmayconductast udyorent rustt hewor kt oan‘ oper at i
ng
agency ’appoi nt edbyi tt odet er mi newhet hert hecompanyi si nf actsi ck.
Nor mal l
y,thel eadf inanci al inst itution( IDBI ,I
CI CI ,IFCI , SFC)ort hel eadpubl icsect orbankt hat
hasf inancedt hecompanyi snomi nat edast heoper atingagency .Leadi nst i
tut i
oni sonet hat
hasmaj orf inanci al st akei nt hesi ckcompany .Theenqui ryist obecompl etedwi thin60day s.
Oncompl etionoft heenqui ry ,theBI FRwi lldecl ar ewhet hert hecompanyi ssi ckornot .
Rev i
v alPackage
Onceacompanyhasbeenf oundsi ck, theBI FRmaygr antt i
met ot hesi ckcompanyt oenabl eit
tomakei t
snetwor thposi tiveandbr i
ngt hecompanyoutofsi ckness, withoutanyext er nal
financi alassi st ance.
Ifitisf oundi nf easi blef orcompanyt omakei tsnetwor thposi tivewi thoutanyext ernal financi al
assi st ance, ori ft heBI FRdeci dest hatt hecompanycannotmakei tsnet wor thposi ti
v e
Rehabi li
tationofSi ckUni t
s359wi thinar easonabl et i
me, theBI FRwi lldirectt heoper at ing
agencyt opr epar easui tabl er ev ival packagef ort her est or ationoft heheal thoft hecompany .
Theoper atingagencypr epar esasui t
abl er ev ival package.Ther ev ival packagemayv ar yf rom
caset ocasedependi ngont henat ur eoft hepr obl em andmayi ncl ude
 addi tional financi al assi stance,
 post ponementofr ecov er yofl oanal readyl entbybanksandf inanci al inst itutions,
 changei nmanagement ,
 amal gamat ion,
 sal eofr edundantasset s,
 l easeofasset soranyot hersui tabl emeasur e.
Ther ev i
val packageshoul dbesubmi ttedt ot heBI FRwi thinat imel i
mi tof90day sorsuch
ext endedper i
odasmaybegr ant edbyt heBI FR.
Onsubmi ssionoft her ev i
v al packagebyt heoper at ingagency ,theBI FRsendst her ev ival
packagei nadr af tf or mt oal lt hei nt erest edpar ties( i.
e. ,thesi cki ndust ri
al company , thebanks/
financi alinst i
tut ionswhohav egi venf inanci al assi st ancet ot hesi ckcompany ,theoper ating
agency ,thet r
ansf er eecompany( i
ft her ei sar ecommendat ioni nt her ev ival packagef or
amal gamat ion)et c., elicitingt hei rv iews/ suggest ionsont her ev ival package.
TheBI FRwi llal sopubl ishpar ticul ar soft hedr af tr ev ival packagei nnewspaper si nv iti
ng
suggest ions/ obj ect ions, ifany , from t heshar ehol der soft hesi ckcompany ,credi tor sand
empl oy eesoft hesi ckcompany ,transf er eecompanyandanyot heri nt erest edpar ty.
Onr ecei ptofv iews/ suggest ions/ obj ect ionsont hedr af tr eviv al scheme, theBI FRmay ,if
deemedf i
t,af for danoppor t
uni tyt ot hei nt erest edpar tiest obehear d.Af tercar ef ulexami nat i
on
ofal l theaspect s, theBI FRwi l
l sanct i
ont her ev ival schemewi thorwi thoutanymodi ficat ions.
Thescheme, assanct i
oned, wi llcomei nt of or cef r om t hespeci fieddat eandal l theconcer ned
par tiesar er equi r edt oabi debyt hepr ov isionsoft her ev ival scheme.
TheBI FRmayal soor dert heoper atingagencyt oi mpl ementt hesanct i
onedr ev ival scheme.
Whent her ev i
v al packageasf inal i
zedbyt heBI FRcont ainsf ur therf inanci alassi stanceorr eli
ef s,
concessi ons, sacr ificeset c.( forexampl e, sanct i
oni ngofaddi tional financi alassi stancef ort he
pur chaseofcer t ainbal anci ngequi pment s, wai v ingofpenal int er est/ compoundi nterest
charged, wai vi
ngofi nterestinpar torf ull
,waiv erfrom salestaxet c.
)theschemewi l
lbe
cir
culatedt ot heconcer nedagenci esf ortheirconsentt ober eceivedwi thi
naper iodof60day s.
Oncet hev ar i
ousagenci esinvolvedint her evivalschemegi v
et heirconsenttothescheme, i
t
wil
lbecomebi ndingont heconsent i
ngpar ti
est oimplementt her ecommendat ionscont ainedin
therevival scheme.Howev er,whenanyoft heinvolvedagencydoesnotgi veit
sconsentt othe
scheme, theBI FRhasnopower st of orcet heagencyt oaccordi t
sconsent .Ifi
nt heopini onof
theBIFR, ther eviv
al packagecannotbesuccessf ulwithouttheconsentf r
om oneormor eof
theagenci esi nvolved,theBI FRhasnoot heropt ionbutt orecommendf orwindingupoft he
company .Infact ,
thet hreatofact ual windingupoft hecompanyi stheonlyweaponi nthe
handsoft heBI FRt omaket hev ariousagenci estoext endsuitablereli
efsandconcessi onsas
maybedeemednecessar ybyt heBI FR.BI FRi tselfcannotinit
iatethewindinguppr oceedi ngs.It
canonl yfor war di
tsopi niont otheconcer nedHi ghCour tandtheHi ghCour twil
l i
niti
atet he
windinguppr oceedi ngs.