{"id":7159,"date":"2021-07-29T05:58:48","date_gmt":"2021-07-29T05:58:48","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=7159"},"modified":"2021-07-29T05:58:51","modified_gmt":"2021-07-29T05:58:51","slug":"loan-restructuring-for-msme","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/","title":{"rendered":"RBI Loan Restructuring for MSME up to Rs 50 crores"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Due to the second wave of the COVID-19 pandemic, the RBI (Reserve Bank of India) provide some relief by doubling the limits of loan restructuring for MSME (Micro, Small, and Medium Enterprise) and small borrowers up to Rs. 50 crores. According to the Government data, today, the condition for MSME is not bad as it was a few months earlier. They are still in their recovery phase but displaying marginal growth. That&#8217;s why the Government of India released the second version of their promising scheme through <strong><em>Resolution Framework 2.0<\/em><\/strong>. This scheme is meant to provide <a href=\"https:\/\/swaritadvisors.com\/msme-registration\" class=\"text-primary\"><strong>MSMEs<\/strong><\/a> on account to developed or improved credit thresholds. The new scheme comes up with a modified credit limit which is double the threshold available in the earlier version. The RBI informed on June 02, 2021 that the maximum limit for loan restructuring for MSME, small companies or loans to business proprietors has been increased from Rs. 25 crores to Rs. 50 crores.<\/p>\n\n\n\n<p>On May 05, the Central Bank declared the second round of loan restructuring for MSME borrowers, small entities or businesses, and individuals who didn&#8217;t avail of the facility in the earlier round. Under the Resolution Framework 2.0, businesses and individuals can choose for loan restructuring option for up to Rs. 25 crores, now it has been increased up to Rs. 50 crores.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a5f1112850\" class=\"ez-toc-cssicon-toggle-label\"><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><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a5f1112850\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/#Loan_Restructuring_%E2%80%93_Meaning\" title=\"Loan Restructuring \u2013 Meaning\">Loan Restructuring \u2013 Meaning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/#Impact_of_Loan_Restructuring_on_Credit_Growth\" title=\"Impact of Loan Restructuring on Credit Growth\">Impact of Loan Restructuring on Credit Growth<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/#Eligibility_%E2%80%93_Loan_Restructuring_for_MSME\" title=\"Eligibility \u2013 Loan Restructuring for MSME\">Eligibility \u2013 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-4\" href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/#Who_can_Avail_the_Benefits_under_Resolution_Framework_20\" title=\"Who can Avail\nthe Benefits under Resolution Framework 2.0?\">Who can Avail\nthe Benefits under 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-5\" href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/#Last_Day_for_Applying\" title=\"Last Day for Applying \">Last Day for Applying <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Loan_Restructuring_%E2%80%93_Meaning\"><\/span>Loan Restructuring \u2013 Meaning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It\nrefers to the facilities provided by the financial organisation to the borrower\nowing to their financial woes increasing from either economic or legal reasons.\nThis facility is not applied to other conditions and, in general, shall consist\nof facilities on lending terms and conditions by changing some contract terms\n(inclusive of interest capitalisation and product change), which majorly relate\nto the interest, maturity term, collateral implementation to cover up the loan\ndebt, supersession of the actual borrower.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Impact_of_Loan_Restructuring_on_Credit_Growth\"><\/span>Impact of Loan Restructuring on Credit Growth<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Borrowers\nshould also remember that loan restructuring will impact their credit score\nand, therefore, their loan eligibility. The Reserve Bank of India had asked\nbanks to report such matters as &#8220;restructured&#8221; to credit bureaus in\nthe previous restructuring. Loans said that restructured damages the borrowers&#8217;\ncredit scores.<\/p>\n\n\n\n<p>If\na borrower has two\/three credit lines with a bank and chooses for recasting the\ndebt of even a single loan, the lender will report all three as restructured to\ncredit bureaus. If a borrower has an auto loan, a credit card, and a personal\nloan from the same financial organisation. He chooses for restructuring the\ncredit card outstanding. The lender will report all three as restructured.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_%E2%80%93_Loan_Restructuring_for_MSME\"><\/span>Eligibility \u2013 Loan Restructuring for MSME<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Borrowers\nare having collective exposure of up to Rs. 50 crores &amp; who has not availed\nrestructuring under any of previous restructuring frameworks (comprising under\nthe Resolution Framework 1.0 dated 6<sup>th<\/sup> August, 2020) and who were\ncategorised as \u201cStandard\u201d as on March 31, 2021 shall be eligible to be\nconsidered under Resolution Framework 2.0, the Central Bank stated.<\/p>\n\n\n\n<p>It\nis crucial to know the notion of &#8220;Standard Account&#8221; in this\nbackground. Often, this word is confused with an overdue account. A standard\naccount mentions a loan that is not an NPA (Non-Performing Asset). An NPA or\nNon-Performing Asset is a loan that has been overdue for the previous ninety\ndays. On the 91<sup>st<\/sup> day of due, such a loan is transferred into an NPA\nor bad debt. Hence, an account that was not categorised as NPA on March 31,\n2021, can have access to the Resolution Framework 2.0.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_Avail_the_Benefits_under_Resolution_Framework_20\"><\/span>Who can Avail\nthe Benefits under Resolution Framework 2.0?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following individuals can have access to the benefits available under the Resolution Framework 2.0<sup><a href=\"https:\/\/www.rbi.org.in\/Scripts\/NotificationUser.aspx?Id=12105&amp;Mode=0\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>:<\/p>\n\n\n\n<ol><li>Individuals or the person who\nhave availed of advances and loans for the purposes of business and to whom the\nlending institutions and organisations have aggregate exposure of not more than\nRs. 50 crores as of March 31.;<\/li><li>Small entities or businesses,\nincluding those involved in wholesale and retail trade, other than those\ncategorised as MSME as of March 31, 2021 and to whom the lending institutions\nhave aggregate exposure of not more than Rs. 50 crores as of March 31.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Last_Day_for_Applying\"><\/span>Last Day for Applying <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Banks\nand financial organisations can invoke restructuring under the suggested\nframework till September 30. The time for loan moratorium needs to be executed\nwithin ninety days after the invocation. The expansion of Resolution Framework\n2.0 from Rs. 25 crores to Rs. 50 crores will make more prominent the credit\ncoverage to a higher number of businesses or companies and individuals.\nConsidering the crucial contribution of MSMEs to GDP, the relief measures will\nfoster MSME recovery and additional encourage financial stability in the\neconomy.<\/p>\n\n\n\n<p><strong><em>For\nthose who get the one-time loan restructuring previously: <\/em><\/strong><\/p>\n\n\n\n<ul><li>Lenders and banks can extend\nthe loan restructuring option up to two years for those who have opted moratorium\nin the previous round.;<\/li><li>The RBI (Reserve Bank of India)\nhas confirmed that small companies could access this option to address their\nexisting liabilities.<\/li><\/ul>\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>According to the credit scoring agency Crisil, around 2\/3<sup>rd<\/sup> of the medium-sized companies can have access to loan restructuring for MSMEs after the increase of the aggregate exposure threshold up to Rs. 50 crores. The proposed agency rates around 6900 medium-sized companies, of which nearly 4700 are small scale companies. These companies are having exposure to bank loans of up Rs. 50 crores and standard accounts as of 31<sup>st<\/sup> March, 2021.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/what-is-msme-and-what-are-the-benefits-of-msme-registration\/\">What is MSME and What are the benefits of MSME Registration?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Due to the second wave of the COVID-19 pandemic, the RBI (Reserve Bank of India) provide some relief by doubling the limits of loan restructuring for MSME (Micro, Small, and Medium Enterprise) and small borrowers up to Rs. 50 crores. According to the Government data, today, the condition for MSME is not bad as it [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":7160,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[34],"tags":[777],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7159"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=7159"}],"version-history":[{"count":17,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7159\/revisions"}],"predecessor-version":[{"id":7179,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7159\/revisions\/7179"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/7160"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=7159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=7159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=7159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}