The Managing Directors/CEO's/Owners/Director/Partners/General Managers        
All FHRAI Members      

CC:      All Members of the Executive Committee
             All Regional Associations          

Subject: One Time Loan Restructuring Scheme for Covid -19 Related Stress

Dear Member,

As you all are aware, the moratorium period provided by RBI for loan repayments and interest payments, due to Covid -19 pandemic, ended by 31st August 2020.  Subsequently the RBI announced the Resolution Framework for Covid -19 Related Stress under which corporate, individual borrowers and MSMEs are allowed to undertake a one-time restructuring of their stressed exposures.

The salient features of the debt restructuring plan are the following:

• In the case of corporate resolution plans without change in ownership, no automatic downgrade in asset classification is mandated even where the resolution plan provides for concessions that previously required a downgrade.
• Borrowers are eligible if their exposure were classified as standard as on March 1, 2020 and provided restructuring plans are implemented by March 31, 2021 allowing ample time to work out a plan for each borrower.
• The concessions apply to lending by most lending institutions including Banks, NBFCs, HFCs, and Co-op Banks too.
• MSME are defined as those whose aggregate exposure is Rs 25 Cr or less and they are covered by a special circular that is more advantageous than for other borrowers.
• The eligible borrowers accounts have to be standard until the date of invocation of the resolution plan for other borrowers. This is not necessary for MSME but their loans can be upgraded to standard assets on date of implementation of restructuring plan.
• To be eligible for these relaxations for borrowers and banks, the invocation of the resolution plans needs to be done by December 31 2020 with implémentation of the plan by March 31, 2021.  For MSME borrowers, the requirement is limited to the implementation of the restructuring by March 31, 2021.
• The lending institutions are required to make additional provisions of only 5% for restructured loans to MSME borrowers. However, this is higher for other categories as defined in the circular in greater detail.

At this time of deep crisis, members who have stressed exposures can avail the one- time restructuring plan for debt restructuring. It is thus suggested that they may through their CA / lawyers/ advisors immediately approach their bankers or their consortium of bankers and suggest / negotiate the facilities they would require in their debt restructuring plan.

By opting for the restructuring plan, in a way the members can avail of moratorium continuance, extension of loan tenor, moratorium of interest payment or EMI or both for such period as may be required depending on their status of business / revenues.

We strongly recommend that all our members must apply for restructuring of their existing loans and avoid the threats of turning into NPAs, insolvencies, negative credit ratings etc. 

RBI’s notifications on the loan restructuring scheme are enclosed for your ready reference.

We assure all our support and co-operation in our collective struggle for survival and revival.

Kind Regards,

Gurbaxish Singh Kohli
Vice President
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The Federation of Hotel & Restaurant Associations of India
Regd. Off.: B-82, 8th Floor, Himalaya House, 23 K.G. Marg, New Delhi - 110 001
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