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Govt mulls changes to MSME prepackaged scheme, more teeth for IBBI

Experts feel that the current voting limit of 66 per cent for initiating the prepack process is a very rigid condition, which has been a deterrent for MSMEs

Ruchika Chitravanshi New Delhi

msme, jobs, workers, supply chain, industy, manufacturing, production, business, small, women, gender, female, workforce, labour force

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3 min read Last Updated : May 24 2023 | 7:55 PM IST

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Taking cue from the poor response to the prepackaged scheme for MSMEs, the corporate affairs ministry is considering measures to make it more attractive. This would include more power to the Insolvency and Bankruptcy Board of India (IBBI) for making changes as required for easing the process and holding more awareness and advocacy sessions for banks, according to government sources.

“We are thinking of putting the prepackaged scheme in a sort of regulatory sandbox. Right now, it is a very prescriptive approach. Every step of the way is defined,” a senior government official said.

Only three companies have been admitted under the scheme since 2021. The government is planning to take a more flexible approach and allow the IBBI to tweak requirements related to majority votes, avoidance transactions among other things for the MSMEs applying for the prepackaged insolvency scheme. Voting for initiating prepack process, government