What is Resolution Framework 2.0 for COVID 19 Related Stress of Micro, Small and Medium Enterprises (MSMEs)?
Under this framework, as per RBI guideline, Aavas is permitted to offer a limited window to extend the facility of restructuring as earlier allowed by RBI vide its circular DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020 for existing loans to the MSMEs, without a downgrade in the asset classification
Who are eligible customers?
Following are considered as eligible customers:
The borrower should be classified as a MSMEs as on March 31, 2021 in terms of the Gazette Notification S.O. 2119 (E) dated June 26, 2020.
The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtaining as on March 31, 2021.
The aggregate exposure, including non-fund based facilities, of all lending institutions to the borrower does not exceed ₹25 crore as on March 31, 2021
The borrower’s account was a ‘standard asset’ as on March 31, 2021.
If the borrower is not registered in the Udyam Registration portal, such registration shall be required to be completed before the date of implementation of the restructuring plan for the plan to be treated as implemented
What are the conditions which makes me not eligible for a resolution plan under this framework?
Conditions to makes you not eligible for resolution plan includes:
Your loan account was not restructured in terms of the earlier MSME restructuring circulars
The credit facilities / investment exposure of yours was classified as non-performing by the lending institution as on March 31, 2021.
What is process of determining Applicability under this framework?
If the borrower is affected financially and cash flows are adversely impacted due to COVID pandemic, can place request for resolution plan.
Aavas shall assess and validate the impact on cash flows due to pandemic and viability to service revised EMIs based on income streams of the borrower. Intention, repayment behavior shall be factored in.
The resolution process under this window shall be treated as invoked once Aavas and borrower agreed to proceed with the resolution plan to be implemented.
What Resolution Options available under this framework for me ?
Based on an assessment of income streams of yours, the resolution plans implemented under this window may include:
Rescheduling of payments,
Conversion of any interest accrued or to be accrued into another credit facility,
Granting of moratorium. The moratorium period, if granted, may be for a maximum of two years, and shall come into force immediately upon implementation of the resolution plan,
The extension of the residual tenor of the loan facilities may also be granted to borrowers, with or without payment moratorium. The overall cap on extension of residual tenor, inclusive of moratorium period, if any, permitted, shall be two years.
However, compromise settlements are not permitted as a resolution plan for this purpose
Do I need to submit any documents to avail of the Resolution Framework benefit?
Borrower to provide documents to validate adverse impact on cash flows and to ascertain the viability to service revised EMIs as needed by Aavas.
Additionally, a consent letter and supplementary agreement with re-negotiated terms shall be signed by all borrowers, co-borrowers and guarantor of the existing loan.
What is the last date of application to seek relaxation under this Policy?
All requests submitted on or before September 20, 2021. Shall be possible to process.
Is there any timeline for implementation of Resolution plan?
Yes, within 90 days from date of invocation.
I have multiple loan accounts with Aavas. Can relief be sought in more than one Account?
How can I apply under this policy?
You can approach to your branch with written application to avail the same. Alternatively, you can send your written request at [email protected] .
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