RBI permits debt restructuring of small and medium industries

Mumbai: India faces another lockdown in the wake of the second wave of Coronavirus pandemic. Some states have imposed strict restrictions; the industry sector faces the heat of the situation once again. In this scenario, the Reserve Bank of India (RBI) took some important decisions to provide relief to the industry sector. Taking cognisance of the hardships faced by the industry, RBI opened up the option to restructure the debt of the borrowers. Micro, small and medium enterprises will be able to avail the benefits. Banks can restructure loans up to a limit of ₹250 million. RBI has also made an additional provision of ₹500 billion to make funds available for the companies importing medical equipment and increasing the hospitals’ facilities. Over and above this, RBI Governor Shashikanta Das made some other important announcements.


RBI permits debt restructuring of small and medium industriesAlthough lockdown has not been imposed in the entire country given the new wave, many states have initiated steps like curfew or lockdown to break the chain. This has affected Industrial production and turnover. In this scenario, the RBI has decided to bring relief to the MSME industry. RBI has brought a scheme to restructure its debts. On Wednesday, RBI Governor Shaktikanta Das announced the scheme. According to it, all the debts that have not availed any previous scheme to restructure will be eligible. RBI also will be making new loans available to the MSME sector through the banks.

Moreover, it will be purchasing debt bond worth ₹350 billion to increase liquidity in the market. Furthermore, the RBI has announced an additional provision ₹500 billion. This will increase the cash availability with the banks. These funds will be made available to the banks at REPO rates. The banks can use these funds to provide loans to companies in the medical equipment imports sector or infrastructure development in the hospitals. Vaccine producers, vaccine importers, medical equipment importers, Oxygen and ventilator importers and Hospitals for improving their infrastructure can avail fresh loans under this scheme. Governor Das announced that the special window facility for this purpose would remain open till 31st March 2022.

RBI has made a fund of ₹100 billion available, even to the Small Finance Banks. These banks can assist small businesses with these funds. The economic calculations of the states also have dwindled. Taking cognisance of this, the period for overdraft facilities has been increased. The period has been increased from 36 days to 50 days. The state governments will be able to take advantage of the scheme till 30th September. RBI has also eased the KYC process and the new process of identifying the customer through video has been prepared.

Meanwhile, last year during the lockdown imposed given the Coronavirus outbreak; the RBI had given the Loan Moratorium facility to the common borrowers. Some people are expressing a hope that the RBI will announce a similar facility even now. But the RBI has not, till now, taken any decision in that relation. But the RBI has said that the demand is declining due to Corona crisis. Besides, the restrictions imposed have affected the economy. Governor Shashikanta Das said that the RBI closely monitors the effects of the Corona second wave on the economy.

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