- The loan restructuring would be a big relief for troubled small businesses hit by demonetisation in late 2016 and the implementation of Goods and Services tax (GST) in July 2017.
Features of the Restructuring Scheme:
- The scheme is applicable to the stressed accounts provided the total fund and non-fund based exposure to such a borrower does not surpass Rs 25 crore.
- The scheme will be applicable to the existing loans of the MSMEs that are in default but classified as 'standard' as on January 1, 2019, without an asset classification downgrade.
- The restructuring has to be implemented by March 31, 2020.
- A provision of 5 per cent 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.
- Each bank or non-banking financial company (NBFC) should formulate a policy which includes a framework for viability assessment of the stressed accounts and regular monitoring of the restructured accounts.
- The loan restructuring scheme would be applicable for the borrowers who are GST-registered on the date of implementation of restructuring.
- The restructuring would aid to provide a stimulus to the economy since the MSME sector contributes significantly to job creation and employs around 12 crore people, the second largest after the agriculture sector.
Question:
Q. The RBI has proposed a one-time loan restructuring scheme for which entities?a. Medium and Large Enterprises (MLEs)
b. Large Enterprises (LEs)
c. Micro, Small and Medium Enterprises (MSMEs)
d. Rural and Regional Enterprises (RREs)
