[RBI\/2018-19\/100 :-: DBR.No.BP.BC.18\/21.04.048\/2018-19 dated 01-01-2019]<\/p>\n
Dear Sir\/ Madam,<\/p>\n
Micro, Small and Medium Enterprises (MSME) sector \u2013 Restructuring of Advances<\/p>\n
1. Please refer to the\u00a0circulars DBR.No.BP.BC.100\/21.04.048\/2017-18 dated February 07, 2018<\/a>\u00a0and\u00a0DBR.No.BP.BC.108\/21.04.048\/2017-18 dated June 6, 2018<\/a>. In this regard, with a view to facilitate meaningful restructuring of MSME accounts {MSME as defined in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006} that have become stressed, it has been decided to permit a one-time restructuring of existing loans to MSMEs classified as \u2018standard\u2019 without a downgrade in the asset classification, subject to the following conditions:<\/p>\n i. The aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower does not exceed \u20b9250 million as on January 1, 2019.<\/p>\n ii. The borrower\u2019s account is in default but is a \u2018standard asset\u2019 as on January 1, 2019 and continues to be classified as a \u2018standard asset\u2019 till the date of implementation of the restructuring.<\/p>\n iii. 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.<\/p>\n iv. The restructuring of the borrower account is implemented on or before March 31, 2020. A restructuring would be treated as implemented if the following conditions are met:<\/p>\n v. A provision of 5% in addition to the provisions already held, shall be made in respect of accounts restructured under these instructions. Banks will, however, have the option of reversing such provisions at the end of the specified period, subject to the account demonstrating satisfactory performance during the specified period as defined at paragraph 5 below.<\/p>\n vi. Post-restructuring, NPA classification of these accounts shall be as per the extant IRAC norms.<\/p>\n vii. Banks and NBFCs shall make appropriate disclosures in their financial statements, under \u2018Notes on Accounts\u2019, relating to the MSME accounts restructured under these instructions as per the following format:<\/p>\n viii. All other instructions applicable to restructuring of loans to MSME borrowers shall continue to be applicable.<\/p>\n 2. Banks and NBFCs desirous of adopting this scheme shall put in place a Board approved policy on restructuring of MSME advances under these instructions within a month from the date of this circular. The policy shall,\u00a0inter alia,<\/em>\u00a0include framework for viability assessment of the stressed accounts and regular monitoring of the restructured accounts.<\/p>\n 3. It is clarified that accounts classified as NPA can be restructured; however, the extant asset classification norms governing restructuring of NPAs will continue to apply.<\/p>\n 4. As a general rule, barring the above one-time exception, any MSME account which is restructured must be downgraded to NPA upon restructuring and will slip into progressively lower asset classification and higher provisioning requirements as per extant IRAC norms. Such an account may be considered for upgradation to \u2018standard\u2019 only if it demonstrates satisfactory performance during the specified period.<\/p>\n 5. \u2018Specified Period\u2019 means a period of one year from the commencement of the first payment of interest or principal, whichever is later, on the credit facility with longest period of moratorium under the terms of restructuring package. \u2018Satisfactory Performance\u2019 means no payment (interest and\/or principal) shall remain overdue for a period of more than 30 days. In case of cash credit \/ overdraft account, satisfactory performance means that the outstanding in the account shall not be more than the sanctioned limit or drawing power, whichever is lower, for a period of more than 30 days.<\/p>\n Yours faithfully,<\/p>\n (Saurav Sinha)\n
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\n No. of accounts restructured<\/td>\n Amount (\u20b9 in million)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nChief General Manager-in-Charge<\/p>\n