RBI unveils loan recast plan for individuals, business

Deccan Chronicle.  | Sangeeta G

Business, Economy

Loan recast under Resolution Framework 2.0 can be invoked up to September 30, 2021

The RBI said individuals who have availed of personal loans, loans for business purposes and small businesses, including those engaged in retail and wholesale trade, other than those classified as MSME, are eligible for the loan recast. — DC file photo

Chennai: Responding to the second Covid wave, the RBI announced a slew of measures on Wednesday, providing relief and liquidity to a large section of customers. It provided loan recast for certain individuals and small businesses. A liquidity window of Rs 50,000 crore has been opened for healthcare companies and patients, while small businesses can avail of Rs 10,000 crore credit from small finance banks.

As far as loan recast is concerned, individual borrowers, small businesses and MSMEs having aggregate exposure of up to Rs 25 crore and who have not availed of restructuring under any of the earlier restructuring frameworks are eligible for loan restructuring under Reso-lution Framework 2.0.

This is the second restructuring scheme announced by the central bank in less than one year, with the first unveiled in August last year.

Loan recast under Resolution Framework 2.0 can be invoked up to September 30, 2021 and has to be implemented within 90 days after invocation. The beneficiaries had to be classified as standard accounts as on March 31, 2021.

In the case of individual borrowers and small businesses which have availed of loan restructuring under last year’s loan recast, their plans can be modified by increasing the period of moratorium or extending the residual tenure up to two years. Small businesses and MSMEs which have restructured their loans earlier also can get their sanctioned working capital limits reviewed as a one-time measure based on a reassessment of the working capital cycle, margins and the like.

Later in a notification, the RBI said individuals who have availed of personal loans, loans for business purposes and small businesses, including those engaged in retail and wholesale trade, other than those classified as MSME, are eligible for the loan recast.

However, compared to the blanket loan moratorium given last year, the proportion of restructured loans will be lower under Resolution Framework 2.0.

In order to provide further support to MSMEs and other unorganised sector entities, a special three-year long-term repo operations (SLTRO) of Rs 10,000 crore at repo rate will be conducted for the small finance banks (SFBs). Under this, fresh lending of up to Rs 10 lakh will be provided per borrower. This facility will be available till October 31, 2021. SFBs are also permitted to lend to smaller microfinance institutions under priority sector lending. This facility will be available up to March 31, 2022.

"As in the recent past, the RBI will continue to monitor the emerging situation and deploy all resources and instruments..." said governor Shaktikanta Das.

Taking the country’s healthcare infrastructure into consideration, RBI also announced an on-tap liquidity window of Rs 50,000 crore at the repo rate for healthcare infrastructure and services companies till March 31, 2022.

The RBI has also decided on a second purchase of government securities for an aggregate amount of Rs 35,000 crore under G-SAP 1.0 on May 20. It had bought government bonds worth Rs 25,000 crore on April 15.

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