RBI for privatising SFCs

8216;8216;State government stake in SFCs may be taken over by the Small Industrial Development Bank of India Sidbi or individual banks as may be appropriate,8217;8217; the committee said in its report, adding 8216;8216;Sidbi and banks, either individually or jointly, would be ideally placed to initiate the privatisation of SFCs.8217;8217;

During the 1990s, the SFCs suffered setbacks which coincided with the inability to raise resources on competitive terms and deterioration of their functioning on commercial lines.

The committee viewed that SFCs Act needed to be repealed in order to enable them to become effective vehicles for the promotion of SMEs and tiny sectors. It has also underscored the importance of commercially viable SFCs to be restructured, which could become effective vehicles for banks/financial institutions to fund the SME and tiny sector. 8216;8216;Restructuring of SFCs could be facilitated by their non-performing assets NPAs being transferred to appropriate Asset Reconstruction Companies,8217;8217; the committee said adding individual SFCs or groups of SFCs may be reconstituted under the Companies Act in order to enhance their functioning.