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'Give relief to MSMEs benefited under RBI's Restructuring Framework 1.0'
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SME Times News Bureau | 14 May, 2021
The Finance Industry Development Council (FIDC) has
sought loan restructuring for the micro, small and medium enterprises
(MSME) who benefited from the previous loan restructuring framework
provided by the Reserve Bank of India amid the pandemic.
In a
letter to RBI Governor Shaktikanta Das, Mahesh Thakkar, the Director
General of FIDC said that the second wave of the Covid pandemic has
created new uncertainties in the country's economic revival and MSME
customers are the most affected category of borrowers, especially in
sectors such as education (school and school bus operators),
transportation (staff bus and route bus operators) and tourism (taxi
operators, travel operators).
He noted that in the earlier
framework, restructuring was done for MSMEs also based on expectations
that market conditions would improve and should get to normal by March,
2021.
These customers have seen their prospects of revival,
which looked promising in the past quarter, suddenly and substantially
negatively impacted due to the second wave. As per certain research
reports, 40 per cent of trucks are stranded due to lockdowns and freight
rates down by 20 per cent in 75 major routes in the country, thereby
impacting the livelihoods of millions of truck operators and drivers.
"Hence,
we request you to kindly clarify/permit providing relief to MSME
customers whose contracts were restructured under Resolution Framework
1.0 by using this window to modify such plans to the extent of
increasing the period of moratorium and/or extending the residual tenor
up to a total of 2 years, along the same lines as the support provided
to individuals and small businesses. We request the RBI to issue an
amendment or clarification on the matter," the letter said.
The RBI on May 5, 2021 permitted restructuring of loans and advances
availed by individuals and small businesses. Clause 22 of the
notification permits lending institutions to provide further relief to
those borrowers, who had availed the benefit of restructuring in terms
of Resolution Framework - 1.0, where the resolution plan permitted
moratorium of less than two years.
Among other
recommendations, the NBFC body has also suggested he inclusion of hybrid
use of tractors under the definition of small businesses, thereby
allowing restructuring of such mixed-use tractor (equipment) loans.
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