The Reserve Bank of India (“RBI”), on May 5, 2021, had issued revised resolution frameworks in respect of resolution of Covid-19 related stress of: (a) individuals and small businesses (“Resolution Framework 2.0 for individuals and small businesses”); and (b) Micro, Small and Medium Enterprises (“MSMEs”) (“Resolution Framework 2.0 for MSMEs”).
Under the aforesaid revised resolution frameworks, RBI had specified the following eligibility thresholds:
a. Clause 2 of the Resolution Framework 2.0 for MSMEs, specified the eligibility conditions for MSME accounts, to be considered for restructuring under the framework, as accounts where the aggregate exposure, including non-fund based facilities, of all lending institutions to the MSME borrower should not exceed INR 25 crore as on March 31, 2021.
b. Clause 5 of the Resolution Framework 2.0 for individuals and small businesses, specified the eligible borrowers, who may be considered for resolution under the framework, as follows:
(i) Individuals who have availed of loans and advances for business purposes and to whom the lending institutions have aggregate exposure of not more than INR 25 crore as on March 31, 2021;
(ii) Small businesses, including those engaged in retail and wholesale trade, other than those classified as MSME as on March 31, 2021, and to whom the lending institutions have aggregate exposure of not more than INR 25 crore as on March 31, 2021.
Pursuant to the review of the above, RBI vide its circulars dated June 4, 2021 (“Circulars”), has now enhanced the aforementioned eligibility limit of INR 25 crore to INR 50 crore.
Please find a copy of the Circular issued for MSMEs here, a copy of the Circular issued for individuals and small businesses here, a copy of the Resolution Framework 2.0 for MSMEs here and a copy of the Resolution Framework 2.0 for individuals and small businesses here.
This update has been contributed by Aastha (Partner) and Swaraj Narula (Senior Associate).
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