Explained: Who can opt for loan repayment relief under RBI’s ‘Resolution Framework 2.0′

The Reserve Bank of India (RBI) on Wednesday announced several relief measures to help citizens, small businesses, healthcare providers and vaccine makers to tackle the second wave of the pandemic.

One key announcement made by RBI Governor Shaktikanta Das was regarding the Resolution Framework 2.0 for individual borrowers, small businesses and MSMEs.

The RBI has released a detailed press release to explain the framework under which loan restructuring can be availed by individuals or small businesses struggling to repay loans.

Read | Can the RBI’s new measures present actual succour to Covid-hit companies and people?


The central financial institution mentioned it has supplied a window to allow lenders to implement a decision plan for loan repayment by people under the Resolution Framework 2.0.

Noting that the localised lockdowns have damage people throughout the second wave, it mentioned the extension of the decision framework will provide much-needed monetary help to struggling debtors.

Simply put, the decision framework will permit banks to supply a moratorium or revised loan repayment schedule to burdened debtors.

It is just like the Resolution Framework 1.0 was introduced final yr by the central financial institution to assist retail debtors combating loan repayments.

Under the plan, people might opt for a restructuring of the loan — moratorium and rescheduling of cost — if their funds weren’t overdue by greater than 30 days.


Individuals who’ve availed loans with mixture publicity of lower than Rs 25 crore as of March 31, 2021 are eligible to use for the Resolution Framework 2.0.

Retail debtors who didn’t opt for the sooner decision framework introduced in August final yr can profit from the Resolution Framework 2.0 until September 30, 2021.

However, there are specific situations that should be fulfilled for availing the profit.

“Borrowers i.e. individuals and small businesses and MSMEs having aggregate exposure of up to Rs 25 crore and who have not availed restructuring under any of the earlier restructuring frameworks (including under the Resolution Framework 1.0 dated August 6, 2020), and who were classified as ‘Standard’ as on March 31, 2021 shall be eligible to be considered under Resolution Framework 2.0,” RBI Governor Shaktikanta Das mentioned.

“Restructuring under the proposed framework may be invoked up to September 30, 2021 and shall have to be implemented within 90 days after invocation,” he added.

This suggests that the loan account of a borrower needs to be classified as ‘standard’ as of March 31, 2021. Borrowers who are applying for the first time under Resolution Framework 2.0 are permitted a moratorium or revised repayment schedule for up to two years.

It may be noted that the loan relief measures will also be available to individuals who have opted for restructuring in the Resolution Framework 1.0 but not to the extent of two years.

“In respect of individual borrowers and small businesses who have availed restructuring of their loans under Resolution Framework 1.0, where the resolution plan permitted moratorium of less than two years, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of moratorium and/or extending the residual tenor up to a total of 2 years,” the RBI said.

Suppose an individual had opted for an 8-month moratorium under the Resolution 1.0 framework and the tenure of the loan went up by six more months after it was restructured. The total restructuring period comes to 14 months. In such a scenario, the individual can avail restructuring under the Resolution 2.0 framework for 10 more months.


Tax consultants recommend that the loan repayment relief — be it a moratorium or rescheduling of EMI repayment — needs to be solely availed in case your funds have been hit onerous throughout the second wave of Covid-19.

If you can afford to repay your month-to-month loan instalments, there isn’t any have to opt for loan repayment relief under the Resolution Framework 2.0. Borrowers ought to be aware that availing for a moratorium or revised cost schedule under the decision plan will enhance the curiosity in your loan.

Therefore, it’s best to solely apply for the decision plan if you end up prone to default on a loan resulting from an absence of funds.

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