The Reserve Bank of India had vide their following circulars notified Resolution Framework 2.0 for Resolution of Covid-19 related stress of borrowers: -
(i) Resolution Framework 2.0 - Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs) [DOR.STR.REC.12/ 21.04.048/ 2021-22 dated 5.5.2021].
(ii) Resolution Framework - 2.0: Resolution of Covid-19 related stress of Individuals and Small Businesses [DOR.STR.REC.11/21.04.048/2021-22 dated 5.5.2021].
The Reserve Bank of India has subsequently vide their circulars dated 4.6.2021 revised the threshold for aggregate exposure, including non-fund based facilities, of all lending institutions to the above borrowers category from Rs. 25 Cr to Rs. 50 Cr.
Following are the broad criteria for the MSME borrowers being eligible for restructuring of their borrowings in terms of the RBI Circulars dated 5.5.2021 and 4.6.2021: -
(i) The borrower should be classified as a micro, small or medium enterprise as on 31.3.2021 in terms of the Gazette Notification S.O. 2119 (E) dated 26.6.2020.
(ii) The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtaining as on 31.3.2021.
(iii) The aggregate exposure, including non-fund based facilities, of all lending institutions to the borrower does not exceed Rs. 50 Cr as on 31.3.2021.
(iv) The borrower's account was a 'standard asset' as on 31.3.2021.
(v) The borrower's account was not restructured in terms of the circulars DOR.No.BP.BC/4/21.04.048/2020-21 dated 6.8.2020; DOR.No.BP.BC.34/ 21.04.048/ 2019-20 dated 11.2.2020; or DBR.No.BP.BC.18/ 21.04.048/ 2018-19 dated 1.1.2019 (collectively referred to as MSME restructuring circulars).
(vi) The restructuring of the borrower account is invoked by 30.9.2021. For this purpose, 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. The decisions on applications received by the lending institutions from their customers for invoking restructuring under this facility shall be communicated in writing to the applicant by the lending institutions within 30 days of receipt of such applications. The decision to invoke the restructuring under this facility shall be taken by each lending institution having exposure to a borrower independent of invocation decisions taken by other lending institutions, if any, having exposure to the same borrower.
(vii) The restructuring of the borrower account is implemented within 90 days from the date of invocation.
(viii) If the borrower is not registered in the Udyam Registration portal, such registration shall be required to be completed before the date of implementation of the restructuring plan for the plan to be treated as implemented.
(ix) Upon implementation of the restructuring plan, the lending institutions shall keep provision of 10 percent of the residual debt of the borrower.
(x) All other instructions specified in the circular DOR.No.BP.BC/4/ 21.04.048/2020-21 dated 6.8.2020 shall remain applicable.
Following are the broad criteria for the borrowers viz. Individuals and Small Businesses being eligible for restructuring of their borrowings in terms of the RBI Circulars dated 5.5.2021 and 4.6.2021: -
(i) Individuals who have availed of personal loans (as defined in the Circular DBR.No.BP.BC.99/08.13.100/2017-18 dated 4.1.2018 on "XBRL Returns - Harmonization of Banking Statistics"), excluding the credit facilities provided by lending institutions to their own personnel/staff.
(ii) 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 Cr as on 31.3.2021.
(iii) Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises as on 31.3.2021, and to whom the lending institutions have aggregate exposure of not more than Rs. 50 Cr as on 31.3.2021. Provided that the borrower accounts / credit facilities shall not belong to the categories listed in sub-clauses (a) to (e) of the Clause 2 of the Annex to the Resolution Framework 1.0, read with the response to Sl. No. 2 of FAQs on Resolution Framework for Covid-19 related stress (Revised on 12.12.2020).
Borrowers fulfilling the criteria specified in the RBI Circulars dated 5.5.2021 and 4.6.2021 will be eligible for Resolution Plan detailed below, subject to the borrower satisfying SBIGFL that the overdues under personal loans/ factoring facilities is on account of business disruption on account of the Covid-19 pandemic.
Restructuring / Resolution Policy
A. Personal Loans:
The resolution plan will be examined on request received by SBIGFL from the Servicer of the Pool of Assets purchased by SBIGFL based on the individual borrower's requests received by the Servicer to the Pool of Assets.
B. Small Businesses and MSMEs: -
| Facility | Remarks |
|---|---|
|
Domestic Factoring (DF) |
a) The overdue under the DF Facility is on account of non-payment of the receivables by the debtor(s) due to business disruption on account of the Covid-19 pandemic as represented by the debtor. b) Borrower to provide details of the debtor's written representation to them expressing their inability to pay the receivables on the due date in terms of the Purchase Order. The debtor should provide a plan for payment of the outstanding receivables, which should be agreeable to the Borrower. c) The Borrower being agreeable to pay interest at the interest rate decided by the sanctioning authority for the extended credit period beyond the due date. d) The credit period of the outstanding invoices will be extended by a maximum period of 2 years from the initial due date. e) In case of the approved debtors under the DF Facility are entirely backed by bank guarantees provided by the debtors to SBIGFL/ the debtors bank guarantees have been assigned by the Borrower in favour of SBIGFL, then the extension of credit terms for the outstanding invoices is subject to the outstanding invoices being entirely covered by unexpired bank guarantees. In case the proposed extended due date is beyond the bank guarantee expiry date, then the extended due dates should be co-terminus with the bank guarantee(s) expiry date. |
| Export Factoring (EF) |
a) The overdue under the EF Facility is on account of non-payment of the receivables by the debtor(s) due to business disruption on account of the Covid-19 pandemic as represented by the overseas debtor. b) Borrower to provide details of the debtor's written representation to them expressing their inability to pay the receivables in terms of the Purchase Order. The debtor should provide a plan for payment of the outstanding receivables, which should be agreeable to the Borrower. c) The payment plan will be agreed upon by SBIGFL subject to the following: - (i) The Borrower being agreeable to pay interest at the interest rate decided by the sanctioning authority for the extended credit period beyond the due date. d) The credit period of the outstanding invoices will be extended by a further period from the due date such that the extended due date shall not exceed six months from the shipment date. |
| Reverse Factoring (RF) (backed by Bank Guarantee) |
1) The overdues under the RF Facility is on account of non-payment of the Sellers receivables by the borrower due to business disruption on account of the Covid-19 pandemic viz. the business activity of the borrower was not running/ running at sub-optimal level due to resurgence of Covid-19 pandemic in India. The borrower to provide written representation to that effect, which will be examined by the sanctioning authority on a case-to-case basis. 2) The payment plan will be agreed upon by SBIGFL subject to the following: - (i) The borrower being agreeable to pay interest at the interest rate decided by the sanctioning authority for the extended credit period beyond the due date. |
