The Central Government had asked the central bank to extend the restructuring of debt scheme beyond 31st March 2020, the Reserve Bank of India has extended the onetime restructuring of MSME loans to 31st December 2020.
RBI said, The MSME sector is very important given that the MSME sector plays an integral role in the growth of the Indian economy, contributing over 28 percent of the GDP, more than 40 per cent of exports and has created employment for about 11 crore people.
RBI in its statement said, “Considering the importance of MSMEs in the Indian economy and for creating an enabling environment for the sector in its efforts towards formalisation, a one-time restructuring of loans to MSMEs that were in default but ‘standard’ as on January 1, 2019, was permitted without an asset classification downgrade. The restructuring of the borrower account was to be implemented by March 31, 2020.”
Further it added, “As the process of formalisation of the MSME sector has a positive impact on financial stability and this process is still underway, it has been decided to extend the benefit of one-time restructuring without an asset classification downgrade to standard accounts of GST registered MSMEs that were in default as on January 1, 2020. The restructuring under the scheme has to be implemented latest by December 31, 2020.” Detailed guidelines for the restructuring scheme of MSME loans are awaited and soon to be released