Public Sector Banks (PSBs) have formulated a templated procedure for the seamless implementation of RBI’s Resolution Framework 2.0, under the aegis of the Indian Banks’ Association (IBA), to restructure loans for individuals, small businesses, and MSMEs up to ₹25 crores.

A process flow for individual loans with a standardized templated procedure has been developed by the banks for business and MSME loans up to ₹10 lakh. The process flow envisioned for individual loans consists of: (1) A customer accessing the bank’s portal or manually submitting an application for restructuring, and (2) the processing of application and implementation in the system. The resolution process must be invoked within 30 days from the receipt of the application, with the last date for invocation being September 30.  In invocation both the borrower and the bank will agree to proceed with the Resolution Plan, which will include rescheduling of payments, granting of the moratorium, and extension of tenure. A decision in this regard will be communicated to the borrower in writing.  The Resolution Plan must be implemented within 90 days from the date of invocation, but not later than December-end 2021.  The moratorium period granted will be for a maximum of 2 years, and will start immediately after the implementation of the Resolution Plan.  For the implementation of resolution framework for business loans, banks have categorized loans into three categories: up to ₹10 lakh, ₹10 lakh - ₹10 crores, and above ₹10 crores. Under the templated standardized approach for restructuring Business and MSME loans up to ₹10 lakh, banks have sent bulk SMS to eligible customers including the already restructured accounts. Offer-cum-acceptance letters, along with an application, have been generated centrally and the customers must provide consent in the offer letter itself, the application will then be processed afterward. For loans belonging to ₹10 lakh - ₹10 crores, and above ₹10 crores category, banks will take a graded approach for restructuring and will also include standard application & assessment formats, standard & simplified documentation, and a common outreach approach.

On May 5 the Reserve Bank of India (RBI) announced its ‘Resolution Framework 2.0 for Covid-Related Stressed Assets of Individuals, Small Businesses and MSMEs’. Under this framework, borrowers including individuals, small businesses, and MSMEs, who have an aggregate exposure of up to ₹25 crores and have not availed of restructuring under any of the earlier restructuring frameworks and were classified as ‘standard’ as of March 31, and are eligible to be considered under Resolution Framework 2.0.