What changed
The aggregate exposure threshold for MSME accounts eligible for restructuring under the Resolution Framework 2.0 has been revised upward from ₹25 crore to ₹50 crore as on March 31, 2021. This change modifies clause 2(iii) of the May 5, 2021 circular, while all other conditions remain unchanged.
What it means for you
Banks and lenders can now offer restructuring to MSME borrowers with higher aggregate exposures, up to ₹50 crore, potentially covering more stressed accounts. This provides greater flexibility to support larger MSMEs impacted by Covid-19, but lenders must ensure compliance with other eligibility criteria and not duplicate restructuring from earlier schemes.
What you must do
- Update internal systems and loan tracking to reflect the new ₹50 crore threshold for MSME restructuring eligibility.
- Review existing MSME portfolios to identify accounts with aggregate exposure between ₹25 crore and ₹50 crore that may now qualify.
- Ensure that restructured accounts under this framework do not overlap with previous restructuring schemes listed in clause 2(v).
- Communicate the revised limit to credit and risk teams for consistent application across branches.
Who it affects
All Commercial Banks including Small Finance Banks, Local Area Banks, and Regional Rural Banks, All Primary (Urban) Co-operative Banks, State Co-operative Banks, and District Central Co-operative Banks, All Non-Banking Financial Companies including Housing Finance Companies, All-India Financial Institutions, MSME borrowers with aggregate exposure up to ₹50 crore
Does this revision apply to all MSME restructuring requests?
Yes, the revised threshold of ₹50 crore applies to all MSME accounts being considered under Resolution Framework 2.0, provided they meet other eligibility conditions like not having been restructured under earlier circulars.
What is the effective date for the new threshold?
The threshold is based on aggregate exposure as on March 31, 2021, and the circular was issued on June 4, 2021, so lenders should apply it immediately for eligible accounts.
Are non-fund based facilities included in the aggregate exposure?
Yes, the aggregate exposure includes both fund-based and non-fund based facilities from all lending institutions to the MSME borrower.