The Reserve Bank of India (RBI) will come out with a new definition of sick units shortly, K C Chakrabarty, Deputy Governor, RBI said today.
“We are trying to redefine sick units... very soon we will come up with a new definition,” Chakrabarty said while addressing a conference on SMEs organised by the Bombay Chamber of Commerce and Industry.
Talking about bank financing to SMEs, the senior most deputy governor said entrepreneurs have to be trustworthy and units have to be credit worthy for getting bank finances. The SMEs have to maintain utmost transparency in their transaction with banks.
“Availability of timely credit is more important for SMEs than the cost of credit,” he said, adding businesses can’t only run on borrowed money and promoters have to bring in capital for growth.
He also said that SMEs should foresee their cash flow for at least the next 18 months to arrange for timely availability of bank credit.