RBI’s Rs 16,000-Cr Gift to MSMEs; Loans of Up to Rs 50 Cr Can Be Restructured

“This facility will be available at the prevailing policy repo rate for a period of up to one year, which may be further extended depending on its usage,” it further mentioned.

The central bank decided to keep the key lending rates unchanged in its Monetary Policy Meet from June 2-4. “The MPC voted unanimously to maintain status quo, keeping the policy repo rate unchanged at 4 per cent. The MPC also decided unanimously to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward,” RBI said.

Earlier in May, RBI announced Resolution Framework 2.0 to provide some relief to MSMEs, non-MSME small businesses and individuals who borrowed loans. “With a view to enabling a larger set of borrowers to avail of the benefits under Resolution Framework 2.0, it has been decided to expand the coverage of borrowers under the scheme by enhancing the maximum aggregate exposure threshold from ₹25 crore to ₹50 crore for MSMEs, non-MSME small businesses and loans to individuals for business purposes,” RBI said.

What it means for MSMEs:

“It is appreciative of RBI to address the pandemic effects on multiple micro and small businesses like salons, car repair and rental services, who saw miniscule business. The measures announced would certainly assist in their revival process,” said Shachindra Nath, executive chairman and managing director, U GRO Capital.

“Towards supporting the larger MSME ecosystem, RBI has decided to extend a special liquidity facility of ₹16,000 crore to SIDBI for on-lending/ refinancing through novel models and structures. The impact will be visible in ensuring sustained credit flow in the real economy. Further expanding the Resolution framework 2.0 from Rs 25 crore to Rs 50 crore will extend the credit coverage to a higher number of individuals and businesses . Considering the significant contribution of MSMEs to GDP, the relief measures will catalyze MSME recovery and further stimulate financial stability in the economy,” said Nath.

“Special liquidity facility of Rs 16,000 crore to SIDBI to support MSMEs has been extended as announced by RBI Governor Shaktikanta Das is a major shot in the arm keeping in view the current economic scenario. Moreover, coverage of Covid 2.0 recast scheme from Rs 25 crore to Rs 50 crore to cover more MSMEs and small businesses should also be welcomed with open arms as the Reserve Bank of India has increased the maximum aggregate exposure threshold under the resolution framework 2.0. Now individual and MSME borrowers will loans up to Rs 50 crore can opt for restructuring,” said Vikas Gupta, chief executive officer, Greyweave.com.

“Increase of the monetary threshold to 50.00 Crore is a welcome step as it would extended the benefit of the Resolution Framework 2.0 to a larger base of borrower who are otherwise entitled to avail restructuring under the said framework, but were left out previously,” said Girish Rawat, partner, L&L Partners.

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