Debt Restructuring for Micro, Small and Medium Enterprises: Appropriate Laws, Awareness and Enforcement

Micro, Small and Medium Enterprises (MSMEs) are the most critical constitutions in the production and manufacturing economy. Their character, nature and scale of economies seem insignificant relative to the mid cap and Large cap Corporates. With specific reference to the MSMEs financial requirement the funding through debt is the pivotal subject that decides the rise and fall of the MSME enterprises. While MSMEs required a quicker and seamless sanctioning of loans the Banks concerns about the recovery of the loans and not allowing it to be categorized as Non-Performing Assets (NPAs). This study generated, as well as extracted data to find if there was a need to enact a new law or amend the existing laws related to debts and banking systems. All the stakeholders who are involved in the process of creating the debt, securing it, deploying it were interviewed. It concluded that the debt restructuring is essential to treat the loans, repayment consideration and restructuring of debts of MSMEs in a manner to differentiate it from the other corporate debts. Interpretation sharpness and enforcement of the acts in force are the significant consideration rather than authoring new laws or amending the existing laws. There is a requirement of more sensitisation and awareness programs among the MSMEs through their representative bodies.