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RBI allows loan restructuring for individuals, MSMEs

Published in Banking & Finance Wednesday, 05 May 2021 18:10

Reserve Bank on Wednesday announced a slew of measures including loan restructuring for individual and small businesses hit hard by fresh COVID-19 wave.
To augment supply of goods for COVID care, the central bank opened Rs 50,000 crore on-tap window to ease access to emergency health services to boost provision of immediate liquidity for ramping up COVID-19 related healthcare infrastructure and services in the country.
This liquidity window is being opened till March 31, 2022, he said, adding that under the scheme, banks can provide fresh lending support to a wide ranging of entities including vaccine manufacturers, importers and suppliers of vaccine and medical devices, hospitals and dispensaries and suppliers of oxygen and ventilators importers and also patients for treatment.

  "Banks are being incentivised for quick delivery of credit under the scheme, through extension of priority sector classification to such lending... and these loans will continue to be classified under priority sector till repayment or maturity, whichever is earlier," he said in an unscheduled press briefing.
With regard to restructuring he said, borrowers that are individuals and micro, small and medium enterprises (MSMEs) having an aggregate exposure of up to Rs 25 crore would be considered for the new scheme.
This would be for those who have not availed restructuring under any of the earlier frameworks, including the Resolution Framework 1.0 of RBI dated August 6, 2020, and who are classified as standard as on March 31, 2021, shall be eligible for the Resolution Framework 2.0, he said.
Under the proposed framework, bank may be invoked up to September 30, and shall have to be implemented within 90 days after invocation, he added.
RBI has also introduced Rs 10,000-crore special long-term repo operation for small finance banks.
Under this, loans up to Rs 10 lakh to MSMEs will be considered as priority sector lending, Das said.
Das also announced relaxation in overdraft facility for state governments to enable them to better manage their fiscal situation in terms of their cash flows and market borrowing.
Now the maximum number of days of overdraft, that are only in a quarter, have been increased from 36 to 50 days.
RBI also announced rationalisation of certain components of the extent know-your-customer (KYC) norms for enhancing customer convenience.
These include extending the scope to video KYC known as video based customer identification process, he said.


Mr. Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital

In purview of RBI’s today's announcement regarding “ _Resolution Framework 2.0 for individuals and businesses” and “Term Liquidity Facility for Healthcare sector Mr. Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital stated as below: .

 _“RBI governor’s address has come at a critical time, as the businesses and individuals reel under the grave difficulties posed by pandemic’s second wave. Special term liquidity facility of ₹50,000 crore to ease access to Emergency Health Services, is a highly essential step taken. This, when coupled with some form of Credit Guarantee would smoothen the credit delivery. RBI announced re-opening of one-time restructuring for individuals and MSMEs till September 30 , while further allowing the lending institutions to extend the period of moratorium up to 2 years, under restructuring 1.0. This move will offer immense relief to financial institutions as well as borrowers, towards effectively managing their working capital. Apart from this, I would like to suggest the authorities to extend the coverage of PSL to inculcate lending to NBFCs, whose assets are primarily MSMEs and small businesses. This will in turn enhance the ability of NBFCs to provide credit to the affected businesses.”_

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