The government has accorded sanction to the constitution of a committee for addressing the One-Time Settlement (OTS) requests raised by the Micro, Small and Medium Enterprises, in consonance with the RBI guidelines.
As per an order issued by the General Administration Department (GAD), the committee headed by Principal Secretary to the Government, Finance Department with Commissioner Secretary to the Government, Industries and Commerce Department and Executive Director, J&K Bank as members, shall look into any outstanding issues, including the maximum duration of settlement period, in accordance with the established guidelines.
The committee so constituted shall also clarify and publicize the outstanding issues amongst all stakeholders.
One of the key mandates of the committee is to clarify and publicise the RBI's guidelines on OTS for the benefit of all stakeholders, ensuring a transparent and streamlined process for MSMEs seeking to settle their outstanding dues.
One-time settlement (OTS) is a scheme announced by J&K Bank, which allows an MSME borrower to negotiate a lump-sum payment with the lender to settle an outstanding loan. This approach has been found to be mutually beneficial, as it enables the borrower to resolve their debt and the lender to recover a portion of the outstanding amount.
This move by the Jammu and Kashmir government comes after persistent efforts by industry chambers in both the Kashmir and Jammu regions, advocating for a more practical and negotiated settlement of non-performing asset (NPA) cases in the union territory.
The Federation of Chambers of Industries Kashmir (FCIK) has been at the forefront of this initiative, urging the government to address the challenges faced by MSMEs in settling their outstanding dues with banks and financial institutions.
The Kashmir Chamber of Commerce & Industry ( KCCI) thanked Lt Governor Manoj Sinha and his administration for constituting the committee.
“The government decision is a path-breaking one and will help Banks to recover the money and the borrowers straighten their accounts. The OTS scheme will help investments and the economic growth of Jammu and Kashmir,” KCCI general secretary said.
The KCCI suggests that the new OTS scheme be made applicable to all categories of borrowers so that the NPA cases lingering for a decade or so find a practical closure.