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Debt Restructuring

Debt Restructuring Mechanism for Small and Medium Enterprises (SMEs)

For improving flow of Credit to Small and Medium Enterprises, a debt restructuring mechanism for units in SME sector is implemented by the Bank which are as under:

Sailent Features

Definition of SMEs

SMEs as defined in RPCD Circular No. RPCD.PLFNS.BC. 31/ 06.02.31/ 2005-06 dated August 19, 2005, is reproduced below :

"At present, a small scale industrial unit is an undertaking in which investment in plant and machinery, does not exceed Rs.1 crore, except in respect of certain specified items under hosiery, hand tools, drugs and pharmaceuticals, stationery items and sports goods, where this investment limit has been enhanced to Rs. 5 crore. A comprehensive legislation which would enable the paradigm shift from small scale industry to small and medium enterprises is under consideration of Parliament. Pending enactment of the above legislation, current SSI/ tiny industries definition may continue. Units with investment in plant and machinery in excess of SSI limit and up to Rs. 10 crore may be treated as Medium Enterprises (ME)."

Eligibility criteria

These guidelines would be applicable to the following entities, which are viable or potentially viable :

  • All non-corporate SMEs irrespective of the level of dues to bank.
  • All corporate SMEs, which are enjoying banking facilities from a single bank, irrespective of the level of dues to the bank.
  • All corporate SMEs, which have funded and non-funded outstanding up to Rs.10 crore under multiple/ consortium banking arrangement (for outstanding of Rs.10 crore and above, guidelines are being issued separately).

Accounts involving willful default, fraud and malfeasance will not be eligible for restructuring under these guidelines.

Accounts classified by bank as "Loss Assets" will not be eligible for restructuring.

In respect of BIFR cases bank should ensure completion of all formalities in seeking approval from BIFR before implementing the package.

Viability criteria

The units to be considered for restructuring should be viable or becoming viable in 7 years and the repayment period for restructured debt not exceeding 10 years. For establishing viability Technical Viability Study has to be undertaken by an In House Group.

D Procedure

  • The restructuring would follow on receipt of a request to that effect from the borrowing units.
  • In case of eligible SMEs which are under consortium/multiple banking arrangements, if our bank has the maximum outstanding, it has to work out the restructuring package, along with the bank having the second largest share.
  • The above guidelines will be implemented with prospective effect.

The decision with regard to restructuring/rescheduling will be taken by the competent authority of the bank and will be final.


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