Introduction to FRR2.0
The government is designing FRR2.0 (Framework for Revival and Rehabilitation 2.0) to streamline loan restructuring for distressed Micro, Small, and Medium Enterprises (MSMEs). This framework aims to simplify processes and provide targeted relief measures for financially strained businesses.
Key Features of FRR2.0
Simplified Loan Restructuring
- Simplified procedures for MSME loan restructuring to ensure quick resolution of financial distress.
- Improved support for enterprises experiencing deep financial difficulties.
Enhanced Relief Measures
- Specific relief provisions to help businesses recover and sustain operations.
- Introduction of new credit lines and possible waivers on penalties for delayed repayments.
Scope of Framework
- Extension beyond the existing 2015-16 framework, which catered to MSMEs with loans up to ₹25 crore.
- Focus on developing tailored debt recovery and operational restructuring plans.
Importance of MSMEs in the Indian Economy
- MSMEs form the backbone of India’s economy, contributing significantly to GDP and employment.
- The sector faces ongoing challenges, including:
- Difficulty in accessing credit.
- Repayment constraints during financial downturns.
- Limited relief options under current frameworks.
Existing Government Initiatives
2015 Revival Framework
- Focused on recovery plans for MSMEs with loans below ₹25 crore.
- Encouraged lenders to streamline operations for distressed businesses.
Subordinate Debt Scheme
- Provided financial support to MSMEs in financial distress, aiming to sustain operations and employment.
Proposed Impact of FRR2.0
Strengthened MSME Sector
- Enhances the ability of MSMEs to withstand financial pressures.
- Ensures their continued contribution to the economy and job creation.
Employment Protection
- Loan restructuring and extended credit lines could prevent the closure of businesses, safeguarding approximately 1.2 million jobs.
Revitalized Economic Fabric
- Strengthens India’s small business ecosystem, fostering economic resilience and growth.
