The Finance Industry Development Council (FIDC) has sought loan restructuring for the micro, small and medium enterprises (MSME) who benefited from the previous loan restructuring framework provided by the Reserve Bank of India amid the pandemic.
In a letter to RBI Governor Shaktikanta Das, Mahesh Thakkar, the Director General of FIDC said that the second wave of the Covid pandemic has created new uncertainties in the country's economic revival and MSME customers are the most affected category of borrowers, especially in sectors such as education (school and school bus operators), transportation (staff bus and route bus operators) and tourism (taxi operators, travel operators).
He noted that in the earlier framework, restructuring was done for MSMEs also based on expectations that market conditions would improve and should get to normal by March, 2021.
These customers have seen their prospects of revival, which looked promising in the past quarter, suddenly and substantially negatively impacted due to the second wave. As per certain research reports, 40 per cent of trucks are stranded due to lockdowns and freight rates down by 20 per cent in 75 major routes in the country, thereby impacting the livelihoods of millions of truck operators and drivers.
"Hence, we request you to kindly clarify/permit providing relief to MSME customers whose contracts were restructured under Resolution Framework 1.0 by using this window to modify such plans to the extent of increasing the period of moratorium and/or extending the residual tenor up to a total of 2 years, along the same lines as the support provided to individuals and small businesses. We request the RBI to issue an amendment or clarification on the matter," the letter said.
The RBI on May 5, 2021 permitted restructuring of loans and advances availed by individuals and small businesses. Clause 22 of the notification permits lending institutions to provide further relief to those borrowers, who had availed the benefit of restructuring in terms of Resolution Framework - 1.0, where the resolution plan permitted moratorium of less than two years.
Among other recommendations, the NBFC body has also suggested he inclusion of hybrid use of tractors under the definition of small businesses, thereby allowing restructuring of such mixed-use tractor (equipment) loans.