As per the latest RBI circular on restructuring of loans 2025 for MSME loan restructuring, often referred to as FRR 2.0 (Framework for Revival & Rehabilitation),
MSMEs with exposure up to Rs. 50 crore and defaults up to 60 days (as of June 30, 2025) can apply for one-time restructuring without immediate downgrade to a non-performing asset.
The restructuring must be based on a viability assessment: lenders must evaluate cash flows, debt service capacity, and business continuity before approving a restructuring plan.
Importantly, this scheme is meant to preserve the economic value of business units rather than facilitate “evergreening” of bad loans.
Moreover, in June 2025, RBI issued its Project Finance Directions updating how income recognition and provisioning should be handled in restructuring or resolution of large infrastructure loans.
These rules set out that restructuring must be backed by a credible resolution plan, and income for deferred or restructured projects may only be recognised based on actual cash receipts postrestructuring.
Together, these guidelines reflect RBI’s emphasis on balanced restructuring giving stressed but viable borrowers relief, while ensuring safeguards so lenders don’t misuse the provisions to mask poor asset quality.
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What is the Latest RBI Circular on Restructuring of Loans 2025?
ravi
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2025-11-20T09:55:42+00:00 2025-11-20T09:55:44+00:00Comment
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