Govt eyes revamp of revival scheme for MSMEs in debt

Restructuring loans for small businesses isn't as commonplace as it is for larger businesses

- Manas Pimpalkhare & Rituraj Baruah

The government is working on revamping the framework for revival and rehabilitation (FRR) of debt-ridden micro, small, and medium enterprises (MSMEs) in order to make it easier for small businesses to restructure the loans they have taken out, said two people in the know of the development. The framework would be known as FRR 2.0.

The existing 2015-16 framework, which covers MSMEs with a debt of up to ₹25 crore, calls for lenders to come up with a plan to recover debt and streamline the operations of the enterprise.

Although restructuring loans for larger businesses is commonplace, that is not the case for small businesses, which have less capital and need more cushioning during financial distress.

The revamp is being considered to boost entrepreneurship, said a person in the know of the development.