MUMBAI: In a new year present to the MSME sector, the Reserve Bank on Tuesday allowed a one-time restructuring of current debt up to Rs 25 crore for the companies which have defaulted on payment however the loans given to them have continued to be labeled as standard assets.
The decision will lend a hand the micro, small and medium enterprises (MSMEs) that are facing money crunch in the wake of demonetisation and GST implementation.
The RBI's board in its a very powerful assembly held on November 19, 2018 had suggested the central bank examine a scheme for restructuring of stressed out standard assets of MSME borrowers with mixture credit facilities of up to Rs 25 crore, matter to such stipulations as are vital for making sure financial stability.
To facilitate significant restructuring of MSME accounts that have change into stressed out, the RBI has made up our minds to permit a one-time restructuring of current loans to MSMEs which can be in default but 'standard' as on January 1, 2019, without an asset classification downgrade, the central bank stated in a observation.
To be eligible for the scheme, the mixture publicity, including non-fund based totally facilities of banks and NBFCs, to a borrower will have to not exceed Rs 25 crore as on January 1, 2019, and the restructuring needs to be applied via March 31, 2020.
Restructuring package deal for MSME was once some of the sore points of the tussle between the RBI and the federal government.
There was once an in depth presentation via Financial Services Secretary Rajiv Kumar at the money crunch being confronted via the MSME sector on the a very powerful November 19 board assembly.
The government had suggested several steps to lend a hand the field which contributes 50 in keeping with cent to the producing sector.
"A major step for MSMEs with a total liability up to 25 cr suffering from past issues and illiquidity, though delayed. Congratulations RBI for the restructure circular," Swadeshi ideologue and RBI board member S Gurumurthy tweeted.
Gurumurthy was once pushing for a relief to the MSME sector which gives 12 crore employment, the second biggest after the agriculture sector.
"MSMEs are vital for India's economic ascension. Several initiatives including customised products and strategies as per their needs and automated loan processing have been introduced to achieve faster turnaround and accelerate MSMEs' growth," Kumar had stated ultimate year.
As in keeping with the notification, "A provision of 5 per cent 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."
The borrowing entity is GST-registered at the date of implementation of the restructuring. However, this condition is not going to apply to MSMEs which can be exempt from GST-registration, it stated.
According to the notification, banks and NBFCs adopting this scheme will installed place a board approved policy on restructuring of MSME advances beneath those directions inside of a month from the date of this round.
The policy will include framework for viability overview of the stressed out accounts and common tracking of the restructured accounts.
"It is clarified that accounts classified as NPA can be restructured; however, the extant asset classification norms governing restructuring of NPAs will continue to apply," it stated.
The decision will lend a hand the micro, small and medium enterprises (MSMEs) that are facing money crunch in the wake of demonetisation and GST implementation.
The RBI's board in its a very powerful assembly held on November 19, 2018 had suggested the central bank examine a scheme for restructuring of stressed out standard assets of MSME borrowers with mixture credit facilities of up to Rs 25 crore, matter to such stipulations as are vital for making sure financial stability.
To facilitate significant restructuring of MSME accounts that have change into stressed out, the RBI has made up our minds to permit a one-time restructuring of current loans to MSMEs which can be in default but 'standard' as on January 1, 2019, without an asset classification downgrade, the central bank stated in a observation.
To be eligible for the scheme, the mixture publicity, including non-fund based totally facilities of banks and NBFCs, to a borrower will have to not exceed Rs 25 crore as on January 1, 2019, and the restructuring needs to be applied via March 31, 2020.
Restructuring package deal for MSME was once some of the sore points of the tussle between the RBI and the federal government.
There was once an in depth presentation via Financial Services Secretary Rajiv Kumar at the money crunch being confronted via the MSME sector on the a very powerful November 19 board assembly.
The government had suggested several steps to lend a hand the field which contributes 50 in keeping with cent to the producing sector.
"A major step for MSMEs with a total liability up to 25 cr suffering from past issues and illiquidity, though delayed. Congratulations RBI for the restructure circular," Swadeshi ideologue and RBI board member S Gurumurthy tweeted.
Gurumurthy was once pushing for a relief to the MSME sector which gives 12 crore employment, the second biggest after the agriculture sector.
"MSMEs are vital for India's economic ascension. Several initiatives including customised products and strategies as per their needs and automated loan processing have been introduced to achieve faster turnaround and accelerate MSMEs' growth," Kumar had stated ultimate year.
As in keeping with the notification, "A provision of 5 per cent 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."
The borrowing entity is GST-registered at the date of implementation of the restructuring. However, this condition is not going to apply to MSMEs which can be exempt from GST-registration, it stated.
According to the notification, banks and NBFCs adopting this scheme will installed place a board approved policy on restructuring of MSME advances beneath those directions inside of a month from the date of this round.
The policy will include framework for viability overview of the stressed out accounts and common tracking of the restructured accounts.
"It is clarified that accounts classified as NPA can be restructured; however, the extant asset classification norms governing restructuring of NPAs will continue to apply," it stated.
RBI gives relief to MSME sector, provides for one-time restructuring of loans
![RBI gives relief to MSME sector, provides for one-time restructuring of loans]()
Reviewed by Kailash
on
January 01, 2019
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