RBI revises threshold for exposure limits of borrowing in Resolution Framework-2 for MSMEs
In August 2020 RBI, in view of the need to support the MSME entities on account of the fallout of Covid19 and in view of the Resolution Framework for COVID 19 – related Stress permitted that existing loans to MSMEs classified as ‘standard’ may be restructured without a downgrade in the asset classification, subject to the conditions specified.
RBI on 5th May 2021 in view of the coivid-19 situation, further issued circular on Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs).
Clause 2 of the above circular specified the eligibility conditions for MSME accounts to be considered for restructuring under the framework, which inter alia states that the aggregate exposure, including non-fund based facilities, of all lending institutions to the MSME borrower should not exceed ₹25 crore as on March 31, 2021.
However, in view of the prevailing situation and to provide further relief to MSMEs, this above threshold of ₹ 25 crores has now been further enhanced to ₹50 crore.
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