What changed
The aggregate exposure limit for individuals with business loans and small businesses (excluding MSMEs) was raised from ₹25 crore to ₹50 crore as on March 31, 2021. All other terms of the May 5, 2021 circular remain unchanged.
What it means for you
Banks can now offer resolution plans to a larger set of borrowers—those with total exposure up to ₹50 crore—under the same framework. This provides more flexibility to restructure Covid-stressed accounts without additional regulatory hurdles, potentially reducing NPIs.
What you must do
- Update internal eligibility criteria for Resolution Framework 2.0 to reflect the new ₹50 crore threshold.
- Review existing borrower portfolios to identify accounts now eligible for resolution under the revised limit.
- Ensure all resolution plans comply with unchanged provisions of the May 5, 2021 circular.
- Communicate the revised threshold to credit and risk teams for consistent application.
Who it affects
Commercial banks including SFBs, LABs, and RRBs, Primary Urban Co-operative Banks and State/District Central Co-operative Banks, All-India Financial Institutions, NBFCs including HFCs, Borrowers with aggregate exposure between ₹25 crore and ₹50 crore as on March 31, 2021
Does this change affect the eligibility of MSME borrowers?
No, the circular specifically excludes borrowers classified as MSME as on March 31, 2021. MSMEs are covered under separate resolution frameworks.
What is the effective date for the new threshold?
The revision is effective from the date of the circular, June 4, 2021. All other provisions of the May 5, 2021 circular remain unchanged.