Are you a banker, financial professional, or MSME owner struggling to grasp the complexities of loan restructuring and recovery? With RBI’s evolving guidelines, understanding the right approach is crucial for compliance and business continuity.
📚 CAIIB Study Resources 📚
👉 Check Here
👉 Check Here
👉 Check Here
👉 Get Tests Here
👉 Check Here
👉 Click Here
👉 Click Here
- ✅ Which accounts are eligible for restructuring
- ✅ The role of the resolution committee & decision-making process
- ✅ Key timelines & provisions to follow
- ✅ Penalties for misreporting or non-compliance
- ✅ How early detection & intervention can prevent NPAs
🔔 Watch till the end, as we share insights that could help you navigate MSME restructuring smoothly and avoid regulatory pitfalls.
📌 Engage with us! Comment below with your queries and don’t forget to like, share, and subscribe for more valuable content!
👉 Watch the Full Video Here:
📌 Key Topics Covered in This Video
🔹 Understanding RBI’s Guidelines on MSME Loan Restructuring (00:00:06)
- Banks can restructure only Standard, Sub-standard, or Doubtful accounts.
- Loss Assets cannot be restructured.
- Retroactive restructuring is not allowed – Only current date restructuring applies.
- Borrower’s formal consent is mandatory, except in special cases.
MSME restructuring is a key policy by RBI to help businesses sustain financial crises and avoid NPAs. Understanding which loans qualify for restructuring is the first step toward efficient financial management. Many businesses struggle due to lack of knowledge about loan restructuring criteria. By keeping a check on your account status, you can prevent your loan from slipping into an ineligible category.
🔹 Resolution Framework for MSMEs (00:04:48)
- Introduced in 2016 to manage stressed MSME accounts.
- Covers loans with exposure up to ₹25 crore (later revised to ₹50 crore).
- Involves multiple banks & consortium lending arrangements.
- Resolution Committee includes regional/zonal heads, MSME experts, and state representatives.
This framework ensures that MSMEs receive structured support during financial difficulties. The resolution committee plays a key role in evaluating the best way to revive struggling businesses. Decision-making within a structured framework ensures transparency and a fair process for all stakeholders.
🔹 Decision-Making & Voting Process (00:06:44)
- Voting-based resolution with decision-making by major lenders.
- If exposure is above ₹10 lakh, the resolution plan must be forwarded within 5 working days.
- Three possible resolutions:
- Rectification: Minor adjustments to enable repayment.
- Restructuring: Modifying loan terms for viability.
- Recovery: If repayment is not feasible, initiate recovery actions.
[FREE EPDF] CAIIB ABM Exam | Rehabilitation and Recovery Part 1
The role of lenders in decision-making ensures that all possible avenues are explored before concluding whether an account can be revived or needs recovery action. This step is critical in keeping MSMEs financially stable while protecting banks’ interests.
📢 Conclusion & Next Steps
Understanding RBI’s guidelines on MSME restructuring and recovery is critical for bankers, financial institutions, and MSMEs. By staying compliant and proactive, banks can help businesses recover while reducing NPAs.
- ✔ Only Standard, Sub-standard, and Doubtful accounts are eligible for restructuring.
- ✔ Formal borrower consent is required except in special cases.
- ✔ Timelines are strict – Delays lead to higher provisioning & penalties.
- ✔ Proactive monitoring can prevent accounts from slipping into NPAs.
- ✔ GST registration & ₹50 crore cap are crucial for eligibility.
Effective monitoring and timely restructuring can safeguard both banks and businesses from financial setbacks. This video provides valuable insights that can help MSMEs and financial professionals make informed decisions.
📌 What’s Next?
🚀 Don’t Miss Part 3! We’ll cover the Insolvency & Bankruptcy Code (IBC) framework and its role in stressed asset resolution.
💬 Have Questions? Drop them in the comments below – we’re here to help!
🔔 Subscribe & Stay Updated with the latest JAIIB, CAIIB & Banking Certification content.
📥 Download the PDF for Quick Reference
Want a handy PDF summary of this session? Save our WhatsApp number 8360944207 and send us “Saved for CB” to receive regular updates & PDFs.
🚀 Stay ahead in your banking career with Learning Sessions!
Also Like:
