The Reserve Bank of India has announced another round of loan restructuring for MSMEs, small businesses and individuals with aggregate exposure of up to Rs 25 crore, who have not been beneficiaries of restructuring frameworks.
RBI Governor Shaktikanta Das noted that the resurgence of Covid-19 pandemic in India in recent weeks and the associated containment measures adopted at local/regional levels have created new uncertainties and impacted the nascent economic revival that was taking shape.
“In this environment the most vulnerable category of borrowers are individual borrowers, small businesses and MSMEs,” he said.
“Borrowers i.e. individuals and small businesses and MSMEs having aggregate exposure of upto Rs 25 crore and who have not availed restructuring under any of the earlier restructuring frameworks, and who were classified as ‘Standard’ as on March 31, 2021 shall be eligible to be considered under Resolution Framework 2.0,” Das said.
Restructuring under the proposed framework may be invoked up to September 30, 2021 and shall have to be implemented within 90 days after invocation.
In respect of individual borrowers and small businesses who have availed restructuring of their loans under Resolution Framework 1.0, where the resolution plan permitted moratorium of less than two years, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of moratorium or extending the residual tenor up to a total of 2 years.
Regarding small businesses and MSMEs restructured earlier, lending institutions are also being permitted as a one-time measure, to review the working capital sanctioned limits, based on a reassessment of the working capital cycle, margins, among others.
Further, with a view to incentivise credit flow to the micro, small, and medium enterprise (MSME) borrowers, in February 2021 Scheduled Commercial Banks were allowed to deduct credit disbursed to new MSME borrowers from their net demand and time liabilities (NDTL) for calculation of the cash reserve ratio (CRR).
In order to further incentivise inclusion of unbanked MSMEs into the banking system, this exemption currently available for exposures up to Rs 25 lakh and for credit disbursed up to the fortnight ending October 1, 2021, is being extended till December 31, 2021, RBI announced.