Home / Economy / RBI extends restructuring benefits to small businesses, individuals

MUMBAI : The Reserve Bank of India (RBI) on Wednesday allowed banks and non-banks to extend benefits provided to individual customers and small businesses under the covid restructuring framework, which was made available last year.

“Small businesses and financial entities at the grass-roots level are bearing the biggest brunt of the second wave of infections," said RBI governor Shaktikanta Das in his press briefing.

While no blanket moratorium has been provided for covid 2.0, RBI has allowed banks to restructure smaller loans of exposures less than Rs25 crore, which have been standard as on 31 March 2021. Restructuring under the proposed framework may be invoked up to 30 September and will have to be implemented within 90 days after invocation, it said.

For small borrowers who have availed loan restructuring under the framework, terms can be modified to enhance the moratorium for a maximum of 2 years.

Also, in the case of small borrowers with loans restructured earlier, banks are allowed to review the working capital sanctioned limits, based on a reassessment of the working capital cycle, margins, etc.

These relaxations come after the crisis-ridden microfinance industry sought RBI’s permission to restructure borrower loans and sought urgent liquidity assistance as the second coronavirus wave hurts operations. On 3 May RBI governor Das had met the representatives of NBFCs and MFIs, and the two industry associations—Sa-Dhan and MFIN (microfinance institutions network). Deputy governors M.K. Jain and M.D. Patra, and other top RBI officials also attended the meeting.

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