{"id":33540,"date":"2021-07-27T12:04:37","date_gmt":"2021-07-27T06:34:37","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=33540"},"modified":"2021-07-27T12:04:39","modified_gmt":"2021-07-27T06:34:39","slug":"rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores\/","title":{"rendered":"RBI Confirms Loan Restructuring for MSME up to Rs 50 crores"},"content":{"rendered":"\n<p class=\"has-drop-cap\">For years MSME sector has remained one of the key drivers of the economy owing to its massive presence and contribution. But after being dented by Covid-19, the growth of this sector has hardly witnessed any positive sign; while pandemic obliterated their chances of survival, the Indian Government strived to fix the situation by releasing plenty of schemes. The situation for <a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSME<\/strong><\/a> today is not as worse as it was a few months back. They are still in the recovery phase but showing marginal growth as per various government data. In view of their deteriorating condition triggered by the Covid 19, the Government released the second version of their promising scheme, viz Resolution Framework 2.0. This scheme is meant to serve MSMEs on account of improved credit threshold. The fresh scheme comes up with a revised credit limit which is two times the threshold available in the previous version. The Reserve Bank notified on June 4 2021, that the max limit for <strong>loan restructuring <em>*<\/em><\/strong> had been increased from Rs 25 crores to Rs 50 crores for MSMEs, small entities or loans to business owners.<\/p>\n\n\n\n<p><strong>What\nis loan restructuring*?<\/strong>&nbsp;<\/p>\n\n\n\n<p>Loan restructuring refers to the facilities offered by the financial institution to the borrower owing to their fiscal woes arising from either legal or economic reasons. This facility is not applied to other scenarios &amp; in general, shall include: facilities on lending t &amp; c by changing some contract terms (inclusive of product change &amp; interest capitalization), which primarily relate to the interest, maturity term, collateral execution to cover up the loan debt, supersession of the original borrower.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores\/#An_Overview_on_Resolution_Framework_20\" >An Overview on Resolution Framework 2.0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores\/#Who_can_have_access_to_Resolution_Framework_20\" >Who can have access to Resolution Framework 2.0?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores\/#Who_can_access_the_benefits_under_resolution_framework_20\" >Who can access the benefits under resolution framework\n2.0?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores\/#Last_date_to_apply_for_loan_restructuring_for_MSME\" >Last date to apply for loan restructuring for MSME<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/rbi-confirms-loan-restructuring-for-msme-up-to-rs-50-crores\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_Overview_on_Resolution_Framework_20\"><\/span>An Overview on Resolution Framework 2.0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In May, the RBI unveiled the second round of\nloan restructuring for MSMEs and small businesses that didn\u2019t access the\nfacility in the preceding round.&nbsp;<\/p>\n\n\n\n<p>Resolution Framework 2.0 permits small entities and businesses to access the option of loan restructuring for upto Rs 25 crores dues. Reserve bank has now decided to increase the threshold to Rs 50 crores.\u00a0<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/essentials-of-msme-registration\/\">What are the Essentials of MSME Registration? <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_have_access_to_Resolution_Framework_20\"><\/span>Who can have access to Resolution Framework 2.0?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per RBI, borrowers having max exposure of\nup to Rs 50 crore and those who failed to access restructuring under the\npreceding restructuring framework &amp; and who were classified as Standard as\nof March 31, 2021, can have access to the Resolution Framework 2.0.<\/p>\n\n\n\n<p>It implies that any individual &amp; any small\nentities may access this scheme. The loan restructuring limit has been cranked\nup to Rs 50 crores against the previous limit, which was capped at Rs 25\ncrores.<\/p>\n\n\n\n<p>But, only those credit seekers are eligible\nunder this scheme whose loan account was standard as of March 31, 2021.&nbsp;<\/p>\n\n\n\n<p><strong><em>It is vital to understand the notion of\n\u201cStandard account\u201d in this context.&nbsp;<\/em><\/strong><\/p>\n\n\n\n<p>Oftentimes, this term is confused with an\noverdue account. A standard account refers to a loan that is not a\nnon-performing asset, aka NPA.&nbsp;<\/p>\n\n\n\n<p>A Non-performing asset is a loan that has been\noverdue for the last 90 days. On the 91st day of overdue, such a loan is converted\ninto a bad debt or NPA.<\/p>\n\n\n\n<p>Therefore, an account that was not classified\nas NPA on March 31, 2021, can have access to resolution framework 2.0.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_access_the_benefits_under_resolution_framework_20\"><\/span>Who can access the benefits under resolution framework\n2.0?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following individual can have access to the\nbenefits available under the resolution framework 2.0.<\/p>\n\n\n\n<p>Individuals who obtained credits and advances\nfor business purposes &amp; to whom the financial avenues have aggregate\nexposure of up to Rs 50 crore as of March 31, 2021.&nbsp;<\/p>\n\n\n\n<p>Small entities, including those that are\nventured into retail and wholesale trade, other than those functioning as MSME\nas on March 31, 2021 and to whom the financial avenues have aggregate exposure\nof up to Rs 50 crore as on March 31, 2021.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Last_date_to_apply_for_loan_restructuring_for_MSME\"><\/span>Last date to apply for loan restructuring for MSME<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Banks, as well as financial avenues, can\ninvoke restructuring under the said framework until September 30. The\nmoratorium period should be inculcated within 90 days post invocation.&nbsp;<\/p>\n\n\n\n<p>As per the professionals and experts, the\naugmentation of the resolution framework 2.0 to Rs 50 crore shall increase the\ncredit coverage to a great pool of businesses and individuals. In view of\nMSME\u2019s contribution toward the nation\u2019s economy, the relief measures will\nstimulate the MSME recovery and improve financial stability.&nbsp;<\/p>\n\n\n\n<p><strong>For those who availed of the one-time loan restructuring earlier<\/strong><\/p>\n\n\n\n<p>Banks and the private lender can render the\nloan restructuring option for up to 2 years for those who have chosen\nmoratorium in the earlier round.<\/p>\n\n\n\n<p>The <strong><em>Reserve Bank<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Reserve_Bank_of_India\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> has confirmed that the small entities could access this option to address their prevailing liabilities.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the trusted credit rating agency Crisil, nearly 2\/3rd of the mid-sized entities can have access to loan restructuring for MSMEs after the augmentation of the aggregate exposure threshold up to Rs 50 crores. The said agency rates approx 6800 mid-sized entities, of which nearly 4700 are small scale entities. These entities having a bank loan exposure of up to Rs 50 crores &amp; standard accounts as on March 31, 2021. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/what-is-the-procedure-of-msme-registration-online\/\">MSME Registration \u2013 Know the Entire Procedure <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For years MSME sector has remained one of the key drivers of the economy owing to its massive presence and contribution. But after being dented by Covid-19, the growth of this sector has hardly witnessed any positive sign; while pandemic obliterated their chances of survival, the Indian Government strived to fix the situation by releasing [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":33559,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[1882],"acf":{"service_id":"71"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3404,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/33540"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=33540"}],"version-history":[{"count":37,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/33540\/revisions"}],"predecessor-version":[{"id":33580,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/33540\/revisions\/33580"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/33559"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=33540"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=33540"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=33540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}