The Reserve Bank of India (RBI), which was under tremendous pressure from a few government-nominated directors for a relief to MSMEs, has introduced a one-time restructuring scheme for loans aggregating Rs 25 crore.
The scheme is like ever-greening of loans as the RBI had earlier scrapped the entire restructuring scheme. The insolvency and bankruptcy code (IBC), which called for restructuring or recover, was the ultimate solution for stressed companies in the system.
By introducing a selective restructuring scheme for MSMEs, the RBI is now encouraging the postponement of a stressed problem. Without such a relief, these MSMEs would have landed at the bankruptcy court. Clearly, the RBI's restructuring scheme is a lesser evil for banks than taking them to bankruptcy. Look at how: