Framework for Revival and Rehabilitation of MSMEs

Framework for Revival and Rehabilitation of MSMEs

Framework for Revival and Rehabilitation of MSMEs

The Government of India has notified the instructions for the “Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs)”. As per the provisions made under this framework, each bank will form a “Committee for Stressed Micro, Small and Medium Enterprises” (CSMSME) and decide on Corrective Action Plan (CAP) to help such units come out of the stress. This framework applies to MSMEs having loan limits above Rs. 10 lakhs and up to Rs. 25 crores from the bank. In this article, we look at the Framework for Revival and Rehabilitation of MSMEs in detail.


The main objectives of the framework for Revival and Rehabilitation of MSMEs are as follows.

  • To enable MSMEs to seek relief and concession to revive over difficult financial times.
  • To grant reasonable access to all eligible MSMEs which have availed credit facilities from the bank.

Eligibility Criteria

The following are the eligible MSME units mentioned under this framework.

  • It applies to Micro, Small & Medium Enterprises (MSMEs) having loan limits above Rs. 10 lakhs and up to Rs. 25 crores which covers accounts under consortium or multiple banking arrangements (MBA).
  • It applies to both manufacturing and service MSME units facing problems can be overcome with timely remedial or corrective action.

Detection of incipient stress

Before a loan account of an MSME change into a Non Performing Asset (NPA), the branch should recognise incipient stress under the Special Mention Account (SMA) types are explained below in the tabular format:

S.NoTypes of SMAClassification
1.SMA-0Principal or interest payment delayed for more than 30 days but account showing signs of incipient stress. 
2.SMA-1Principal or interest payment delayed between 31-60 days.
3.SMA-2Principal or interest payment delayed between 61-90 days.

Committee for Stressed MSME

All banks comprise of one or more Committees in the location which is considered necessary by the directors of respective bank to grant reasonable access to all eligible Micro, Small and Medium Enterprises which have acquired credit facilities from the bank.

The Committee should hold the representatives of the Bank, independent expert and representative of the State Government.

Corrective Action Plan (CAP) by the Committee

The Committee will examine various options to resolve the stress in the account. The intention is to provide a feasible solution to preserve the economic value of the assets as well as the lender’s loans and also to allow the enterprise to continue with its business. During the period of operation of the Corrective Action Plan (CAP), the enterprise will be allowed to utilise both secured and unsecured credit for its business operations.

Applicable to the Committee for CAP

  • A bank or lender can request an application for CAP to the committee will inform the concerned enterprise about such claim within 5 working days.
  • The enterprise is required to respond to the application or create a  representation before the Committee.
  • Details of all its liabilities, including the debts owed to the State or Central Government and unsecured creditors have to be enclosed within 15 working days from the date of application.
  • If the enterprise does not reply within the specified time limit period, the Committee may proceed ex-parte.
  • After receiving the application, the committee will decide on the Corrective Action Plan (CAP) as per the norms specified by the RBI and inform the enterprise about such a decision.
  • Upon finalisation of the CAP for revival, the implementation of the plan will be completed by the concerned bank within the specified period.


To regularise the account commitment, specifying actions and timeline have to be obtained from the borrower to withdraw the account from the SMA status or does not turn into the Non-Performing Asset and the commitment should be maintained with identifiable cash flows within the required time limit and without causing any loss for the existing lenders.


An account is considered  for restructuring if:

  • The account is viable and if the borrower is not a wilful defaulter.
  • The promoters are willing to extending their guarantee along with their net worth statement supported by copies of legal titles to assets.
  • The promoters give a declaration that they would not undertake any transaction that would alienate assets without the permission of the Committee.


If either rectification or restructuring of an account is not feasible, due to the recovery process will be resorted. The Committee will recommend recovery in the account within 30 days of its first meeting of an enterprise, and the Committee can take a decision under the corrective action plan (CAP) and inform the enterprise about such an arrangement, within 5 working days. If the Committee is not eligible to decide on CAP and restructuring package due to non-availability of information on dues of the borrower, the Committee will take 30 days for choosing CAP and start preparing the restructuring package. However, they should not exceed this period and proceed with CAP.

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