RBI allows one-time restructuring of existing debt up to Rs 25 crore for defaulted MSMEs

New Delhi, Jan 2 (KNN) The Reserve Bank of India (RBI) allowed a one-time restructuring of existing debt up to Rs 25 crore for Micro, Small and Medium Enterprises (MSMEs) which have defaulted on payment.

 In addition, the loans given to them have continued to be classified as standard assets, RBI said in a statement.

To facilitate meaningful restructuring of MSME accounts that have become stressed, the 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, the central bank said in a statement. 

The decision will help MSMEs which are facing cash crunch in the wake of demonetization and GST implementation.

To be eligible for the scheme, the aggregate exposure, including non-fund based facilities of banks and NBFCs, to a borrower should not exceed Rs 25 crore as on January 1, 2019.

Further, the restructuring has to be implemented by March 31, 2020. 

At the crucial board meeting, there was a detailed presentation by Financial Services Secretary Rajiv Kumar on the cash crunch being faced by the MSME sector.

RBI board member, S Gurumurthy also tweeted on the step taken by RBI, "A major step for MSMEs with a total liability up to 25 crore suffering from past issues and illiquidity, though delayed. Congratulations RBI for the restructure circular."