New Delhi: On Thursday, the Reserve Bank of India (RBI) permitted extending the restructuring of MSME (Micro, Small & Medium Enterprises) debt until 31 March 2021 under the existing framework where MSMEs that were in default but ‘standard’ as on 1 March 2020 were being considered.
In its bi-monthly Monetary Policy Committee (MPC), the central bank decided to allow banks to restructure stressed loans without classifying them as non-performing assets on the condition that make 10% additional provisions on such loans.
RBI governor Shaktikanta Das said, “A restructuring framework for MSMEs that were in default but ‘standard’ as on 1 January 2020 is already in place. The scheme has provided relief to a large number of MSMEs. With COVID-19 continuing to disrupt normal functioning and cash flows, the stress in the MSME sector has got accentuated, warranting further support.”
“Accordingly, it has been decided that stressed MSME borrowers will be made eligible for restructuring their debt under the existing framework, provided their accounts with the concerned lender were classified as standard as on 1 March 2020. This restructuring will have to be implemented by 31 March 2021,” he added.
