Micro, Small and Medium Enterprises (MSME) sector –
Restructuring of Advances
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Reserve Bank of India vide circular no. RBI/2019-20/160,
DOR.No.BP.BC.34/21.04.048/2019-20 dated 11.02.2020 has decided to extend
the one-time restructuring of MSME advances permitted.
According to above mentioned circular, a one-time restructuring
of existing loans to MSMEs classified as 'standard' without a downgrade in the
asset classification is permitted, subject to the following conditions:
i.
The aggregate exposure, including non-fund based facilities, of
banks and NBFCs to the borrower does not exceed ₹25 crore as on January 1,
2020.
ii.
The borrower’s account was in default but was a ‘standard asset’
as on January
1, 2020
and continues to be classified as a ‘standard asset’ till the date of implementation
of the restructuring.
iii.
The restructuring of the borrower account is implemented on or
before December 31, 2020.
iv.
The borrowing entity is GST-registered on the date of
implementation of the restructuring. However, this condition will not apply to
MSMEs that are exempt from GST-registration. This shall be determined on the
basis of exemption limit obtaining as on January 1, 2020.
Ø
It is clarified that accounts which have already been
restructured in terms of the circular
dated January 1, 2019 shall be ineligible for restructuring under
this circular.
Disclaimer:
IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION
WITH THE USE OF THIS INFORMATION.
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