**Summary:**
This Reserve Bank of India (RBI) circular, DOR.No.BP.BC.3421/04.04.048/2019-20 dated February 11, 2020, addresses all banks and Non-Banking Financial Companies (NBFCs) regulated by the RBI and concerns the restructuring of advances to the Micro, Small, and Medium Enterprises (MSME) sector. The circular extends the one-time restructuring of MSME advances as permitted in circular DBR.No.BP.BC.18/21.04.048/2018-19 dated January 1, 2019. It allows for a one-time restructuring of existing loans to MSMEs classified as 'standard' without downgrading the asset classification, subject to the following conditions: (i) the aggregate exposure of banks and NBFCs to the borrower does not exceed ₹25 crore as of January 1, 2020; (ii) the borrower's account was in default but classified as a 'standard' asset as of January 1, 2020, and continues to be classified as such until the restructuring implementation date; (iii) the restructuring is implemented on or before December 31, 2020; and (iv) the borrowing entity is GST-registered on the date of restructuring implementation, unless exempt from GST registration based on the exemption limit as of January 1, 2020. Accounts already restructured under the January 1, 2019 circular are ineligible for restructuring under this circular. All other instructions specified in the January 1, 2019 circular remain applicable. Saurav Sinha, Chief General Manager-in-Charge, signed the circular. For further information, refer to www.rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the primary regulatory body issuing the circular.
NBFCs: Non-Banking Financial Companies, regulated by the Reserve Bank of India and subject to this circular.
Micro, Small and Medium Enterprises (MSME): The sector targeted for the restructuring of advances as per the circular.
DBR.No.BP.BC.1821.04.048/2018-19: Reference circular regarding MSME restructuring, dated January 1, 2019.
January 1, 2020: Date used as a reference point for aggregate exposure and asset classification.
December 31, 2020: The deadline for implementing the restructuring of borrower accounts.
GST: Goods and Services Tax, a condition for restructuring, with exemptions for certain MSMEs.
Saurav Sinha: Chief General Manager-in-Charge at Reserve Bank of India who signed the circular.
भारतीय �रजवर् ब�क
_______________________RESERVE BANK OF INDIA___________________
www.rbi.org.in
RBI/2019-20/160
DOR.No.BP.BC.34/21.04.048/2019-20 February 11, 2020
All banks and NBFCs regulated by the Reserve Bank of India
Dear Sir/ Madam,
Micro, Small and Medium Enterprises (MSME) sector – Restructuring of
Advances
Please refer to the circular DBR.No.BP.BC.18/21.04.048/2018-19 dated January 1,
2019. It has been decided to extend the one-time restructuring of MSME advances
permitted in terms of the aforesaid circular. Accordingly, a one-time restructuring of
existing loans to MSMEs classified as 'standard' without a downgrade in the asset
classification is permitted, subject to the following conditions:
i. The aggregate exposure, including non-fund based facilities, of banks and
NBFCs to the borrower does not exceed ₹25 crore as on January 1, 2020.
ii. The borrower’s account was in default but was a ‘standard asset’ as on January
1, 2020 and continues to be classified as a ‘standard asset’ till the date of
implementation of the restructuring.
iii. The restructuring of the borrower account is implemented on or before
December 31, 2020.
iv. 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. This shall be determined on the basis of exemption limit
obtaining as on January 1, 2020.
2. It is clarified that accounts which have already been restructured in terms of the
circular dated January 1, 2019 shall be ineligible for restructuring under this circular.2
3. All other instructions specified in the circular dated January 1, 2019 shall be
applicable.
Yours faithfully,
(Saurav Sinha)
Chief General Manager-in-Charge