RBI extends deadline for one-time debt recast for MSMEs

Commercial realty projects in default get more time

February 06, 2020 10:17 pm | Updated 10:49 pm IST - Mumbai

In a relief to micro, small and medium enterprises (MSME) sector, the Reserve Bank of India (RBI) has extended the deadline for one- time debt recast for these firms that are in default but have not been classified as non-performing.

An asset becomes non-performing if interest or principal payment is overdue for more than 90 days.

“... it has been decided to extend the benefit of one-time restructuring without an asset classification downgrade to standard accounts of GST-registered MSMEs that were in default as on January 1, 2020,” the RBI said,

December 31 deadline

The restructuring under the scheme has to be implemented latest by December 31, 2020. “This will benefit the eligible MSME entities which could not be restructured under the provisions of the circular dated January 1, 2019 as also the MSME entities which have become stressed thereafter,” RBI said.

The original scheme was applicable for standard MSME accounts as of January 1, 2019, while the restructuring was to be implemented by March 31, 2020.

The central bank has also asked commercial banks to link pricing of loans for the medium-sized enterprises to an external benchmark effective April 1, 2020.

Earlier, banks were directed to link the loan rate to an external benchmark for retail loans and credit extended to micro and small enterprises.

The step was taken with a view to further strengthening monetary transmission, the RBI said.

Commercial realty gains

Separately, the regulator has decided to permit extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate, which are delayed for reasons beyond the control of promoters, by another one year without downgrading the asset classification.

The move is in line with the treatment accorded to other project loans in the non-infrastructure sector.

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