To help MSMEs handle the economic onslaught brought by the Covid-19 pandemic, the RBI has announced one-time restructuring for MSME loans. The scheme for restructuring loans of struggling MSMEs was already in place prior to the Corona outbreak. With the pandemic accentuating the cash flow problems faced by MSMEs, the RBI has extended the deadline for restructuring until 31st March 2021.
This move is intended to alleviate the financial stress faced by MSME borrowers during these challenging times. To be eligible for the restructuring MSME borrowers have to meet the following conditions:
Loans that were classified as standard and not default on 1st January 2020 are eligible for the one-time restructuring.
The aggregate exposure by lenders (banks and NBFCs) to the MSME borrower should not exceed Rs. 25 crores as on 1st March 2020.
The borrower should have a registered GST number. However, this condition is waived for MSMEs that are exempted from GST registration.
Note that the restructuring must be implemented within 31st March 2021.