Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)

In view of the uncertainties created by the resurgence of the Covid-19 pandemic in India in recent weeks, RBI has decided to extend the facility for restructuring existing loans without a downgrade in the asset classification.

A. The above shall be subject to the following conditions:

  1. The borrower should be classified as an MSME as on 31.03.2020
  2. The borrowing entity is GST-registered on the date of implementation of the restructuring.
  3. The aggregate exposure, including non-fund-based facilities, of all lending institutions to the borrower does not exceed INR 25 crores as of 31.03.2021.
  4. The borrower's account was a 'standard asset' as of 31.03.2021.
  5. The borrower's account was not restructured in terms of the circulars previously issued MSME restructuring circulars.
  6. The restructuring of the borrower account is invoked by 30.09.2021 and the decisions on applications received by the lending institutions shall be communicated in writing to the applicant by the lending institutions within 30 days of receipt of such applications.
  7. he restructuring of the borrower account is implemented within 90 days from the date of invocation.
  8. If the borrower is not registered in the Udyam Registration portal, such registration shall be required to be completed before the date of implementation of the restructuring plan for the plan to be treated as implemented.
  9. Upon implementation of the restructuring plan, the lending institutions shall keep the provision of 10% of the residual debt of the borrower.
  10. Lending institutions shall put in place a Board approved policy on the restructuring of MSME advances, not later than a month from the date of this circular.

B. Asset classification of borrowers classified as Standard may be retained.

C. Accounts categorized as NPA 01.04.2021 and date of implementation may be upgraded as 'standard asset', as on the date of implementation of the restructuring plan.

D. In respect of accounts of borrowers which were restructured in terms of the MSME restructuring circulars, lending institutions are permitted, as a one-time measure, to review the working capital sanctioned limits and/or drawing power and decide in this regard by 30.09.2021.

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