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The Reserve Bank of India (RBI), in order to create an enabling environment for the Micro, Small and Medium Enterprises (MSMEs), has announced the norms for restructuring loans defaulted by micro, small and medium enterprises. RBI in the statement released said, “The issue of restructuring of MSME accounts was discussed in the meeting of the Central Board of RBI on November 19, 2018.”
RBI, as per its statement released, has decided to allow “a one-time restructuring of existing loans to MSMEs that are in default but ‘standard’ as on January 1, 2019, without an asset classification downgrade.”
Reserve Bank also said that in order to be “eligible for the scheme, the aggregate exposure, including non-fund based facilities of banks and NBFCs, to a borrower should not exceed Rs 250 million as on January 1, 2019.”
As per RBI, the implementation of restructuring has to be done by March 31, 2020. RBI also maintained that each bank/NBFC are required to formulate a policy for the restructuring scheme “with Board approval which shall, inter alia, include framework for viability assessment of the stressed accounts and regular monitoring of the restructured accounts.”
