RBI focuses MSMEs including exports
Issues
guidelines on
Restructuring
of advances
Permits
a one-time restructuring
Micro,
Small and Medium Enterprises (MSMEs) form an important component of the Indian
economy and contribute significantly to the country’s GDP, exports, industrial
output, employment generation, etc. Considering the importance of MSMEs in the
Indian economy, it is considered necessary at this juncture to take certain
measures for creating an enabling environment for the sector.
The
issue of restructuring of MSME accounts was discussed in the meeting of the
Central Board of RBI on November 19, 2018. The matter was also discussed during
RBI’s recent interactions with the banks and other stakeholders.
The
above issue has been examined in RBI and a view has been taken to facilitate
meaningful restructuring of MSME accounts that have become stressed. RBI has
decided to permit 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.
To
be eligible for the scheme, the aggregate exposure, including non-fund based
facilities of banks and NBFCs, to a borrower should not exceed ₹250 million as
on January 1, 2019. The restructuring has to be implemented by March 31, 2020.
A
provision of 5% in addition to the provisions already held shall be made in
respect of accounts restructured under this scheme. Each bank/NBFC should
formulate a policy for this scheme with Board approval which shall, inter alia,
include framework for viability assessment of the stressed accounts and regular
monitoring of the restructured accounts.
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