Asset Restructuring Module for MSME (ARM-MSME)

A one-time restructuring window under Covid Relief Package has been announced by RBI for MSMEs in August 2020. Against this backdrop, the Small Industries Development Bank of India (SIDBI) has developed a web-based “Asset Restructuring Module for MSMEs (ARM-MSME)”. It is an online Do-It-Yourself (DIY) web-portal for MSMEs to self-create their restructuring proposal/ financial viability projections by iteration of multiple scenarios and relief options. The restructuring proposal can be submitted online to the concerned Banks through this portal. The present article briefs the Asset Restructuring Module for MSME (ARM-MSME).

MSME sector – Restructuring of Advances under Covid Relief Package

To support viable MSME entities on account of the fallout of Covid-19, RBI vides a circular dated August 06, 2020, provides that existing loans to MSMEs classified as 'standard' may be restructured without a downgrade in the asset classification, subject to the following conditions:

The aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower does not exceed Rs.25 crore as of 01.03.2020.
The borrower’s account was a ‘standard asset’ as of 01.03.2020.
The restructuring of the borrower account is implemented by 31.03.2020.
The borrowing firm is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSME units that are exempt from GST registration. This shall be determined based on the exemption limit obtaining as of 01.03.2020.

Applicability of ARM-MSME

Asset Restructuring Module is meant for viable Micro, Small, and Medium Enterprises (MSMEs) borrowers. For loans outstanding above a certain threshold value based upon the internal guidelines, Banks may require preparation of a Techno-Economic Viability (TEV) Report, which will be required to be obtained separately by the borrower. The portal would also help the Banks by providing the facility to rework the financial viability plan/ projections of MSME units submitted through the portal with a standardized approach for timely disposal.

Features of ARM-MSME Portal

The module has functionality both for MSME user and Banks/ Financial Institutions:

ARM-MSME Portal for MSME

The module is in the form of a web-portal wherein the first MSME applicant will register itself by providing basic details, email id, and mobile number. After login, it will prepare its restructuring proposal. Initially, enabling provision for online submission to the Bank Branches has been made. Reports can also be downloaded in PDF format for submission outside the portal

ARM-MSME Portal for Banks/ FIs

After online submission by the MSME user, the proposal will be received at Branch mail id which was fed by MSME user at the time of submission along with the link to rework, User ID, and Password. Branches may edit/ modify the proposal submitted online and finalize at their end

Coverage of the ARM-MSME

The module covers various scenarios of restructuring like the following:

Reschedulement of loans by way of the additional moratorium, change in repayment instalments, an extension of the repayment period, etc
Regularization of overdrawn/ irregular portion of WC limit by way of additional Working Capital Term Loan (WCTL)/ WC Limit enhancement, conversion of part/ full WC Limit into WCT
Funding of Interest - To fund overdue interest/ penal interest (past dues) and future interest by way of Funded Interest Term Loan (FITL).
Change in rate of interest on existing credit facilities
Additional facility for working capital/ capital expenditure purpose as part of the restructuring package

Documents required for preparing Restructuring Proposal

MSME users will require the following documents for preparing the Restructuring Proposal through the Asset Restructuring Module for MSME (ARM-MSME).

Financial statements of the past two years (at least 1 immediately completed year)
Details of its restructuring/ business plan to work out its financial viability plan/ business projections

The following documents required to be submitted at the portal along with the restructuring proposal:

Restructuring application form/ request letter in the format prescribed by Bank and duly signed by Proprietor, all Partners, authorized Director
Last two years balance sheets (wherever applicable as per Statutory requirements) of the units along with Income Tax returns/GST returns
Sales achieved during the current financial year up to the date of submission of the application or the Provisional Balance sheet as at the previous quarter-end.
Net worth Statement of Proprietor, Partners, Directors, and Guarantors
If additional funds are proposed to be infused by the borrower
Details of all liabilities of the unit, including the liabilities owed to the State or Central Government and unsecured creditors
Supporting details for the suggested remedial measures with the estimated time frame by the unit to justify the action plan /solution

Note: To complete the restructuring proposal, in addition to financial projections so worked out, MSME user will also upload soft copies of the signed application form and other documents prescribed by its Bank on the portal before submission to Bank

Reliefs under restructuring package covered in ARM-MSME module

The ARM-MSME module has provision for preparation of restructuring proposal with any of the following combination of reliefs:

Additional moratorium (principal holiday)
Change in repayment instalments (with or without extension)
Regularization of WC limit by way of enhancement or conversion of part or full WC into WCTL
Funding for overdue penal interest/interest and future interest
Change in the rate of interest
Additional loan

MSME entrepreneur Registration in ARM-MSME

To start with, an MSME entrepreneur is required to register in the module by clicking the register icon provided on the top right side of the portal.

Asset Restructuring Module for MSME (ARM-MSME) - Home Page The E-mail id provided at the time of registration would be the user id. Once registration is done, the password would be generated and mailed to the registered e-mail id of the applicant.

Asset Restructuring Module for MSME (ARM-MSME) - User Registration To login, the MSME entrepreneur needs to click the “Login” button. From the small window select user type as “MSME User” and then enter the user id (i.e. registered mail id) and password (received on registered mail)

Asset Restructuring Module for MSME (ARM-MSME) - Login Page

Procedure to prepare Restructuring Proposal through ARM-MSME

On logging in into the module, the applicant can enter Input Data for working out its Financial Viability Assessment/ Projections supporting its restructuring application.
By clicking on the INPUT tab, the applicant may start preparing its financial projections and reports can be generated on the OUTPUT tab.
Once projections have been prepared by the entrepreneur, it gets saved at the Login id created and reports can be generated.
Note: The data input can be reworked/ edited and reports can be regenerated. However, after submission of the proposal to the lender through the module, rework/editing the projections by MSME user will not be permitted