Covid relief: RBI allows loan recast upto Rs 50 crore

MUMBAI: The Reserve Bank of India on Friday announced doubling of loan restructuring limits for struggling small companies to Rs 50 crore from Rs 25 crore as the impact of the second Covid wave continues to ravage smaller firms.

“Based on a review, it has been decided to enhance the exposure threshold to Rs 50 crore,” the RBI Governor Shaktikanta Das said in its post policy statement. “The categories of borrowers to whom the lending institutions have aggregate exposure of not more than Rs 50 crore as on March 31, 2021, and which have not been restructured earlier under any of the specified restructuring frameworks, shall be eligible to be considered for resolution under Resolution Framework 2.0.”

On May 5, the regulator had announced resolution framework 2.0 under which maximum exposure of Rs 25 crore for MSMEs as well as non-MSME small businesses, and loans to individuals for business purposes could be recast if they faced.

Since then several banks and non-bank lenders have been demanding that widening this scope to cover more businesses.

As per the scheme, only those accounts which are classified standard as on March 31, 2021 can be restructured. Also, customers who have already received relief under previous restructuring schemes, would not be eligible.

As part of the recast scheme, banks can extend the tenor of the loan by up to two years and also offer a moratorium. Also accounts that were restructured last year, can be given moratorium upto two years if that has not been provided. The scheme would have to be invoked by September 30 and implemented within 90 days of invocation.

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