Budget 2020: Government Asks RBI To Extend MSME Restructuring Scheme Till March 2021

Government seeks extension of MSME restructuring guidelines by a year

Vishwanath Nair @Vishwanath4389

01 Feb 2020, 02:53 PM IST

Job creation suffers from policies that encourage dwarf MSMEs which tend to never grow, instead of firms that have the potential to grow and become “giants” rapidly. (Source: BloombergQuint)

The government has asked the Reserve Bank of India to consider extending the restructuring scheme for micro, small and medium enterprises by another year till March 31, 2021.

In her Union Budget 2020 speech, Finance Minister Nirmala Sitharaman said this would help MSME entrepreneurs in supporting their business. More than 5 lakh small businesses had benefited from the scheme in the last one year, she said.

The one-time restructuring scheme was first announced by the RBI on Jan. 1, 2019, for MSMEs with loans up to Rs 25 crore. It was applicable on loans that are stressed but still standard at the time of releasing the guidelines.

Any restructuring under this scheme would not attract any downgrade of the asset classification of the account. Lenders were, however, expected to make 5 percent additional provisioning against any account which was restructured under this scheme.

At the time, the banking regulator had announced that this scheme would last till March 2020.