Last updated: February 22nd, 2020 3:33 AM

Restructuring of Advances to MSME

The RBI has issued a notification on Extension of Restructuring of Advances in Micro, Small and Medium Enterprises (MSME) sector on 11th February 2020. RBI has decided to extend the Loan Restructuring for MSME that was introduced in January 2019. The restructuring of advances will improve the financial status of MSMEs through which the business can prosper. This article will explain the restructuring process and its applicability.

Background

The restructuring of Advances for MSMEs that were stressed to provide relief to the MSMEs since they play an important part in the growth of the Indian Economy. The MSMEs contribute to over 28 per cent of the GDP, over 40 per cent of exports, and have created employment opportunities for about 11 crore people in India. Giving due acknowledgement to the importance of MSMEs in the Indian economy and also to create an enabling environment for the MSME sector formally, a one-time restructuring of loans to MSMEs that were in default was permitted without an asset classification downgrade, provided the MSME account was a