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RBI offers relief to MSMEs; allows restructuring of debt up to Rs 25 crore

RBI offers relief to MSMEs; allows restructuring of debt up to Rs 25 crore

Reserve Bank of India has allowed a one-time restructuring of existing debt of up to 25 crore rupees for the companies which have defaulted on payment but the loans given to them have continued to be classified as standard assets.

The decision will help the micro, small and medium enterprises (MSMEs) which are facing cash crunch in the wake of demonetisation and GST implementation. 

MSME Loan Structure

The MSME loan restructuring, according to the RBI statement, has to be implemented by 31 March 2020 and a provision of 5% of the total outstanding loan, in addition to the money already set aside to cover potential losses, will have to be made for such borrowers.

The decision to restructuring of loans was taken during the RBI Board meeting on Dec 19.

The amount of gross bad loans in the micro and small enterprises sector (no data for medium) has been growing over the last few years and stood at ₹82,756 crore in FY17, up from ₹70,842 crore in FY16 and ₹51,952 crore in FY15.

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