MSMEs seek restructuring of NPA accounts to avoid bankruptcy

While micro, small and medium enterprises (MSMEs) continue to grapple with the lockdown, several small businesses are expected to avail the one-time restructuring scheme offered by the Reserve Bank of India (RBI). However, the MSME associations have sought the government's permission to restructure viable non-performing (NPAs) and default accounts where there are no wilful defaulters.

"The RBI policy should be extended to these accounts as well, as bad loans may pile up in coming months. It is the only way to save small businesses from bankruptcy," Mukesh Mohan Gupta, President, Chamber of Indian Micro, Small and Medium Enterprises (CIMSME), said.

Finance Minister Nirmala Sitharaman, while presenting Union Budget 2020 on February 1, said the government has asked RBI to extend the debt restructuring window by another year, ending March 31, 2021. RBI in its Monetary Policy Review Meeting on February 6 said it would be extending the scheme to December 31.

Over six lakh MSME loans were restructured as of March 31. The government expects over 25 lakh MSME loans may be restructured by December 31.