The union ministries of finance and MSME are updating the decade-old framework for revival and restructuring (FRR) for micro, small, and medium enterprises (MSMEs), two people aware of the plan said. The new framework, called FRR 2.0, is aimed at supporting MSMEs by easing their access to finance, the people said on condition of anonymity.
When a loan repayment misses due date, the bank marks it as a special mention account (SMA-0). Once the delay crosses 30 days and 60 days, it is tagged SMA-1 and SMA-2. If the repayment is delayed beyond 90 days, it is classified as a non-performing asset. Once the loan is tagged as SMA, the borrower finds it virtually impossible to raise fresh loans.
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