RBI doubles exposure threshold to ₹50 crore – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/money-and-banking/rbi-increases-exposure-threshold-for-resolution-framework-20/article34723859.ece?homepage=true

WIDE

Move to help MSMEs, small businesses, personal loan borrowers tide over the pandemic

To expand the coverage of the Resolution Framework 2.0, the Reserve Bank of India on Friday announced a doubling of the maximum aggregate exposure to ₹50 crore.

The Resolution Framework 2.0 was announced by the RBI on May 5 to help small borrowers tide over the impact of the second Covid-19 wave and State-level lockdowns.

“The above categories of borrowers to whom the lending institutions have aggregate exposure of not more than ₹50 crore as on March 31, 2021, and which have not been restructured earlier under any of the specified restructuring frameworks, shall be eligible for resolution under Resolution Framework 2.0,” said the Statement on Developmental and Regulatory Policies.

All other conditions will be the same. Banks were seeking an expansion in the aggregate exposure limit as it would help more borrowers. The expectation is that the higher limit will help a majority of such borrowers.

Welcome move

According to Subodh Rai, Chief Ratings Officer and Senior Director, CRISIL Ratings, almost two-thirds of the CRISIL-rated mid-size companies in the corporate sector (standard accounts as on March 31, 2021) now come under its ambit, compared with only half as per the previous threshold.

“Specifically, this will support companies with relatively weaker credit profiles,” he said.

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