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Covid 19 Restructuring
Background and Objective
In year 2020 ,the lock-downs and restrictions on the various economic activities caused by Covid 19 pandemic had a deep financial stress on the borrowers across the sectors and to support the revival of the businesses and to provide relief to the borrowers, RBI had provided a window to the financial institutions to work out and offer resolution plans to the eligible borrowers and exposures vide circulars DOR.No.BP.BC/3/21.04.048/ 2020-21 - dated August 6,2020 , and DOR.No.BP.BC/4/21.04.048/2020-21 - dated August 6, 2020.
Since past few weeks, country is witnessing the resurgence of pandemic, which has been much more stronger and ferocious in its impact and to contain that , again various stringent restrictions on movement of people and economic activities have been imposed in many parts of country , bringing forth new challenges in terms of sustenance of various small businesses ,MSMEs and people associated with these as entrepreneurs ,service providers and their livelihood.
Taking cognizance of this situation, Reserve Bank Of India has again come forward and advised relief measures by offering a second window of Covid resolution Framework vide its communications:
- Circular No RBI/2021-22/31 DOR.STR.REC.11/ 21.04.048/2021-22 - dated May 5; 2021. "Resolution Framework – 2.0 : Resolution of Covid-19 related stress of Individuals and Small Businesses" RBI Circular
- Circular No DOR.STR.REC.20/21.04.048/2021-22 – dated June 4; 2021 “Resolution Framework - 2.0: Resolution of Covid-19 related stress of Individuals and Small Businesses – Revision in the threshold for aggregate exposure” RBI Circular
- Circular No RBI/2021-22/32 DOR.STR.REC.12/21.04.048/2021-22 - dated May 5 ; 2021 "Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)" RBI Circular
- Circular No DOR.STR.REC.21/21.04.048/2021-22 - dated June 4; 2021. “Resolution Framework - 2.0: Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs) – Revision in the threshold for aggregate exposure” RBI Circular
Resolution Framework for Individuals and Small Businesses
• The Individual borrowers who have availed of personal loans, secured and unsecured loans as defined in the Circular DBR. No. BP. BC.99/ 08.13.100/2017-18 dated January 4, 2018, for purposes other than business purpose.
• The employees of the company shall not be eligible under this scheme.
• Individuals who have availed of loans and advances for business purposes and to whom the lending institutions have aggregate exposure of not more than Rs.50 crore as on March 31, 2021
• Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises as on March 31, 2021, and to whom the lending institutions have aggregate exposure of not more than Rs.50 crore as on March 31, 2021.
• Resolution under this facility is only for those borrower accounts, which are under financial stress only on account of economic fallout from Covid 19.
• Resolution framework under this window can be offered only on loan accounts which are classified as Standard as on 31st March; 2021.
• The borrower accounts should not have availed of any resolution in terms of the Resolution Framework – 1.0
• The resolution plans under this window may include rescheduling of payments, conversion of any interest accrued or to be accrued into another credit facility, Extension of residual tenor and /or granting of moratorium for a period of upto maximum of two years etc. based on an assessment of income streams of the borrower. Compromise settlements are not permitted as a resolution plan for this purpose
• In cases of loans of borrowers where the earlier resolution plans had permitted no moratoria or moratoria of less than two years and / or extension of residual tenor by a period of less than two years, the borrower can be offered increase in the period of moratorium / extension of residual tenor to the extent that overall caps on moratorium and / or extension of residual tenor granted under Resolution Framework – 1.0 and this framework combined, shall be two years.
• Resolution under this framework to be invoked not later than September 30, 2021.
• The resolution under this framework must be implemented within 90 days from the date of invocation.
• The credit reporting to Bureaus and CICs in respect of borrowers where the resolution plan is implemented under this window shall reflect “restructured due to COVID-19” as status of the account.
Resolution Framework for Micro, Small and Medium Enterprises (MSMEs)
• The borrower should be classified as a micro, small or medium enterprise as on March 31, 2021.
• The aggregate exposure, including non-fund based facilities, of all the lending institutions to the borrower does not exceed ₹ 50 crores as on March 31, 2021.
• The facility is for those borrower accounts which are under financial stress only on account of economic fallout from Covid- 19.
• The borrowing entity should be GST-registered on the date of implementation of the restructuring provided it is not exempt from GST registration determined on the basis of exemption limit as on March 31, 2021.
• The borrower should be registered in the Udyam Registration portal or such registration shall be required to be completed before the implementation of the restructuring plan.
• The borrower’s account should have been classified as a Standard Asset as on March 31, 2021.
• The borrower account should not have been restructured under any of earlier MSME restructuring schemes.
• The resolution plans under this window may include rescheduling of payments, conversion of any interest accrued or to be accrued into another credit facility, Extension of residual tenor and /or granting of moratorium for a period of upto maximum of two years etc. based on an assessment of income streams of the borrower.
• The restructuring of the borrower account under this scheme should be invoked by September 30, 2021.
• The resolution plan must be finalised and implemented within 90 days of date of invocation .
• The borrowers shall be liable to provide the documentary proofs w.r.t. the MSME , Udyam registration and GST registration and any other relevant document as required.
• All other instructions specified in the circular DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020 shall remain applicable.
Other conditions /Disclaimers:
- This facility shall be offered to the eligible borrowers within the scheme guidelines.
- Eligible borrowers as per the above T&Cs, shall have to express intention before the Company for availing the above restructuring facilities within the ambit of RBI guidelines.
- Borrower will have to apply for the resolution through appropriate mode and shall be under obligation to furnish the information and the documents as asked or required by the company and its officials to work out and /or to assess the feasible plan.
- Indiabulls will review the application submitted by the interested borrowers and appraise the request /application keeping in view, inter alia, the scheme guidelines, various credit & risk parameters and any other related factors and take the decision accordingly.
- For implementation of the resolution plan, borrower/s would be required to complete all the related documentation, including execution of necessary agreements between lender and borrower and collaterals provided, if any, in consonance with the resolution plan being implemented. and further , the borrowers shall be liable to bear the stamp duty and other charges and the processing fee as applicable
- The decision on the application shall be communicated to the applicant within 30 days of receipt of such applications and the required documents and information.
- Click Here for raising concerns or grievances , if any in this regard.
- If interested for Restructuring Click Here