FAQ on MSME Restructuring

1. Whether this Restructuring is applicable to all MSME borrowers?

No, MSME borrowers who are standard as on March 31, 2021 and only if the aggregate exposure of such borrowers is not more than Rs 50 crore from the entire banking system can avail this facility. Further, the unit should be GST registered unit and registration in Udyam portal with correct NIC code is compulsory.

2. My unit is an MSME unit and is coming under the exempted category for GST registration, whether my account is eligible for restructuring without GST registration?

Yes, if your account is in the exempted category and is classified as MSME, your account is eligible for restructuring under this scheme. This shall be determined on the basis of exemption limit obtaining as on March 31, 2021.

3. How I have to apply for the availing such benefits?

You can provide an application to your parent branch with required documents for processing of the file.

4. Is it my right to get my accounts restructured as per RBI’s scheme?

You have the right to apply for restructuring of your loans availed from the bank. But it is Bank’s sole discretion to decide on whether the same is to be allowed or not. The decision of the Bank in this case will be based on the commercial viability of the unit and the proposal submitted by you.

5. If I am giving a plain paper application without any further documents, will the same be considered as request for restructuring and whether invocation will be given in that basis?

Invocation will be provided based on the plain paper application submitted by you. But further submission of documents as required by the bank should be completed within 5 days from the date of your application. Non submission of required data/documents by you within the above stipulated time line will be considered as enough reason for declining your request.

6. Whether the classification of MSME is based on new definition of MSME?

Yes, an account is treated as MSME based on the new definition of MSME in terms of the Gazette Notification S.O. 2119 (E) dated June 26, 2020.

7. Whether my account will be downgraded to NPA upon restructuring of my loans.

No, as a one-time measure, your account will not be classified as NPA upon restructuring under this scheme.

8. My account is already restructured under RBI MSME restructuring circular (DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020; DOR.No.BP.BC.34/21.04.048/2019-20 dated February 11, 2020;  DBR.No.BP.BC.18/21.04.048/2018-19 dated January 1, 2019 or circular DOR.No.BP.BC/3/21.04.048/2020-21 dated August 6, 2020). Whether I am eligible for restructuring under the present scheme.

No, the accounts which are already restructured in terms of the aforesaid circulars, are not eligible for further restructuring. But reassessment of working capital facilities, reassessment of drawing power etc. can be undertaken by the bank.

9. Whether there will be any processing fees/other charges upon restructuring?

Yes, there will be processing charges that will be charged by the bank on a case to case basis. The Rate of Interest also will be fixed at the time of restructuring based on the risk assessment of the borrower.

10.  What is Invocation of restructuring? If restructuring in my account is invoked, whether it is definite that I will get the restructuring done?

The restructuring shall be treated as invoked when the lending institution and the borrower agree to proceed with the efforts towards finalising a restructuring plan to be implemented in respect of such borrower.

It is not necessary that the restructuring will be sanctioned/allowed by the bank if invocation is done. As, invocation is done based on the basic eligibility and the restructuring package will be allowed based on the commercial viability of the proposal. Thus, invocation is just a nod from the Bank that the Bank will be looking into the commercial viability of the proposal and if found eligible for restructuring, the same may be considered.

11. Is there any last date for application for such restructuring?

The borrower has to give an application to the bank on or before September 15, 2021 with full set of documents required by the bank for processing of such proposals. Any application after the mentioned date will be considered for invocation on the sole discretion of the bank. Further, no application will be invoked after September 30, 2021 in any case.

12. Will opting for the restructuring package have an impact on my credit bureau report?

As per regulatory guidelines, your loan/credit facility will be reported to the credit bureau as “Restructured”. 

Please note that as per regulatory guidelines, restructuring has to be reported at a borrower level to the credit bureaus and hence all the facilities / loans of the borrower with the bank will be classified and reported as “Restructured” even if the borrower has taken restructuring for only one loan

13. What is implementation of Restructuring?

A restructuring package will be considered as implemented only if;

• All documentation is completed/security perfection etc. is completed.
• All the changed terms and conditions are effected in the books of the bank and the borrower.

Such implementation has to be completed within 90 days from the date of invocation failing which the restructuring package will become invalid and cannot be availed further.

1. What is the Restructuring Scheme approved by RBI?

On the wake of the economic fallout caused due the lock downs and other serious disruptions caused by the COVID 19 pandemic, RBI has allowed lending institutions to implement resolution plans including restructuring to borrowers who have really affected by the economic disruptions caused by the pandemic.

Accordingly, your bank has framed an internal policy for restructuring of loans of individuals/entities who have adversely impacted by the pandemic.

2. What type of accounts can be restructured under this scheme?

a. Loans availed by Individuals for the following purposes;

i. Purchase of consumer durables

ii. Vehicle loans (other than loans for purchase of commercial vehicle)

iii. Mortgage Loans (excluding loans granted for business purpose)

b. Education Loans

c. Housing Loans.

3. What type of loans are not eligible for restructuring under this scheme?

a. All type of personal/retails/business loans which has been granted for business/commercial purpose is not eligible under this scheme.

b. Loans to individual/entities granted for agricultural purposes.

4. How do I avail the restructuring benefit on my loan?

You have to submit an application in the prescribed format to your parent branch with supporting documents in order to be considered under this scheme.

5. If I am giving a plain paper application without any further documents, will the same be considered as request for restructuring and whether invocation will be given in that basis?

Invocation will be provided based on the plain paper application submitted by you. But further submission of documents as required by the bank should be completed within 5 days from the date of your application. Non submission of required data/documents by you within the above stipulated time line will be considered as enough reason for declining your request.

6. What is an invocation date? Whether there is any last date for Invocation?

The date of invocation shall be the date on which both the borrower and lending institution have agreed to proceed with a resolution plan under this framework. The last date of such invocation should not be later September 30, 2021.

7. What is Invocation of restructuring? If restructuring in my account is invoked, whether it is definite that I will get the restructuring done?

The restructuring shall be treated as invoked when the lending institution and the borrower agree to proceed with the efforts towards finalising a restructuring plan to be implemented in respect of such borrower.

It is not necessary that the restructuring will be sanctioned/allowed by the bank if invocation is done. As, invocation is done based on the basic eligibility and the restructuring package will be allowed based on the further documents, your future income etc.

8. What are the restructuring options that are available to me?

The tenor of your loan may be extended by further 24 months with or without a maximum holiday period of 24 months. The EMI in your account will be rephased after extending the tenor.

9. Do I need to submit any documents to avail of the restructuring benefit?

Yes, it is your duty to establish that your income has been adversely impacted due to the pandemic. Documents with related to your current status of employment/business has to be submitted. For salaried people latest salary slips, bank statements etc. to be submitted. For Self employed borrowers, Bank statements, GST returns etc. may be provided to branch.

10.  Will opting for the restructuring package have an impact on my credit bureau report?

As per regulatory guidelines, your loan/credit facility will be reported to the credit bureau as “Restructured”. 

Please note that as per regulatory guidelines, restructuring has to be reported at a borrower level to the credit bureaus and hence all the facilities / loans of the borrower with the bank will be classified and reported as “Restructured” even if the borrower has taken restructuring for only one loan

11. Will there be any additional cost for me if I restructure my loan?

Yes, upon restructuring your rate of interest may be increased on a case to case basis and you have to pay processing charges also.

12. Whether I am required to sign loan agreements again for restructuring?

Yes, since the existing terms and conditions of the account has changed due to the restructuring, you will be required to execute necessary documents as required by the bank.

13. My loan was taken along with a co-borrower/s. Will all the co-borrowers of the original Loan agreement be required to sign the revised restructuring agreement?

As per regulatory and legal requirements, all borrowers/co-borrowers/guarantors of the original loan need to agree and sign on any changes in the loan structure including the restructuring agreement.

14. My account is already restructured under Resolution Framework for COVID 19 related stress 1.0. Whether I am eligible for restructuring under the present scheme.

No, the accounts which are already restructured in terms of the aforesaid circular, are not eligible for further restructuring. But as a one-time measure, if the moratorium period provided is less than 24 months in the previous restructuring, bank can relook into the same and provide a maximum moratorium of 24 months including that granted when restructured under resolution framework 1.0.

1. What is the purpose of this Resolution Framework?

To provide business units who otherwise have a good track record, but have been adversely affected by the COVID 19 pandemic and their monthly debt servicing obligation becoming disproportionate relative to their cash flow generation.

2. Whether MSME accounts are eligible under this Framework?

No, Restructuring of MSME accounts are guided by separate policy guidelines.

3. What are the eligibility criteria for considering my account for restructuring?

For becoming eligible under the scheme for restructuring the following conditions to be fullfilled;

a. The account should be standard as on March 31, 2021.

b. The operations of the unit to be affected by the economic fallout caused by COVID 19 pandemic and as a result, the cash flow/revenues of the unit should have declines significantly and the unit is not in a position to service its debt from the cash flow generated.

c. The aggregate exposure for your unit should not be more than Rs 50 crore. 

4. Which loans are not covered under this Framework?

a. All accounts with aggregate exposure above Rs 50 crore.

b. MSME Borrowers whose aggregate exposure to lending institutions collectively is upto and including Rs 50 crore as on March 31, 2021 (which is covered under separate scheme).

c. Farm credit

d. Loans to Primary Agricultural Credit Societies (PACS), Farmers' Service Societies (FSS) and Large sized Adivasi Multi-Purpose Societies (LAMPS) for on-lending to agriculture

e. Exposures to financial service providers including NBFCs.

f. Exposure to Central and State Governments, Local Government bodies and body corporates established by an Act of Parliament or State Legislature.

 5. How to apply for relief under this Framework?

The borrower can submit the request to concerned branches where the account is maintained with necessary documents.

6. If I am giving a plain paper application without any further documents, will the same be considered as request for restructuring and whether invocation will be given in that basis?

Invocation will be provided based on the plain paper application submitted by you. But further submission of documents as required by the bank should be completed within 5 days from the date of your application. Non submission of required data/documents by you within the above stipulated time line will be considered as enough reason for declining your request.

7. What are the documents to be submitted to branch?

a. Board Resolution (in case of companies) stating that the company’s operations are under stress on account of COVID 19. In case of other constitutions, an undertaking to this effect to be submitted.

b. GST Returns for the previous year (From April 01, 2019 to March 31, 2020) and the current year (From April 01, 2020 to latest filed GST) to be submitted.

c. Latest financial statements to be submitted. In case of listed entities latest financial statement filed with stock exchanges to be submitted. However in any case AFS 2020 has to be invariably submitted.

d. Cash Budget and projected financials for the period of the loan and a viable Resolution Plan.

e. Any other document as advised by the bank. 

8. What is an invocation date? Whether there is any last date for Invocation?

The date of invocation shall be the date on which both the borrower and lending institution have agreed to proceed with a resolution plan under this framework. The last date of such invocation should not be later September 30, 2021.

9. What is Invocation of restructuring? If restructuring in my account is invoked, whether it is definite that I will get the restructuring done?

The restructuring shall be treated as invoked when the lending institution and the borrower agree to proceed with the efforts towards finalising a restructuring plan to be implemented in respect of such borrower.

It is not necessary that the restructuring will be sanctioned/allowed by the bank if invocation is done. As, invocation is done based on the basic eligibility and the restructuring package will be allowed based on the commercial viability of the proposal. Thus, invocation is just a nod from the Bank that the Bank will be looking into the commercial viability of the proposal and if found eligible for restructuring, the same may be considered.

10. My account is already restructured under Resolution Framework for COVID 19 related stress 1.0. Whether I am eligible for restructuring under the present scheme.

No, the accounts which are already restructured in terms of the aforesaid circular, are not eligible for further restructuring. But reassessment of working capital facilities, reassessment of drawing power etc. can be undertaken by the bank. Further, if the moratorium period provided is less than 24 months in the previous restructuring, bank can relook into the same and provide a maximum moratorium of 24 months including that granted when restructured under resolution framework 1.0.

11. Whether there are any charges incurred?

Yes, there will be processing charges that will be charged by the bank as per the internal policy of the bank.

12. Whether there will be any change in Rate of Interest when restructuring under this scheme?

The Rate of Interest will be fixed at the time of restructuring based on the risk assessment of the borrower.

Any concessions provided during the resolution period shall result in right of recompense.

13. What are the relief/relaxations available under this Framework in case of Term Loan?

a. Moratorium of upto 24 months for repayment of instalments of principal.

b. Extension in the tenor of the loan by up to a maximum of 24 months including the moratorium stated above.

c. Interest moratorium upto a maximum of 24 months. The interest accrued will be opened as a separate Term Loan (FITL) which should be closed within 60 months from the date of opening the loan.

14. What are the relief/relaxations available under this Framework in case of Working Capital Loans?

a. Interest moratorium of up to 24 months which is repayable within a maximum period of 2 years from the date of opening the loan.

15. Whether my account will be downgraded to NPA upon restructuring of my loans.

No, as a one-time measure, your account will not be classified as NPA upon restructuring under this scheme, if the account is standard at the time of invocation. Accounts slipped between invocation date and implementation date will be upgraded upon implementation of restructuring.

16. Whether there will be any change in Loan Instalments post restructuring?

Yes, on account of moratorium granted, if any, and extension of loan period by 24 months, the repayment tenor and amount will be recalculated and advised to you.

17. Will opting for the restructuring package have an impact on my credit bureau report?

As per regulatory guidelines, your loan/credit facility will be reported to the credit bureau as “Restructured”. 

Please note that as per regulatory guidelines, restructuring has to be reported at a borrower level to the credit bureaus and hence all the facilities / loans of the borrower with the bank will be classified and reported as “Restructured” even if the borrower has taken restructuring for only one loan.

18. What is the last date for applying under this Framework?

The borrower has to give an application to the bank on or before September 15, 2021 with full set of documents required by the bank for processing of such proposals. Any application after the mentioned date will be considered for invocation on the sole discretion of the bank. Further, no application will be invoked after September 30, 2021 in any case.