The decision was made in RBI's policy review meetingThe Reserve Bank of India (RBI) on Thursday extended the provision for loan restructuring of small businesses.

The central bank, at its bi-monthly monetary policy committee (MPC) meeting extended the deadline for restructuring of loans of micro, small and medium enterprises (MSMEs) to March 31, 2021, RBI governor Shaktikanta Das said at the end of the 3-day meet.

However the restructuring provision will be available only to MSMEs that were in default but were 'standard' in March, this year.

Notably, the said restructuring framework  for troubled but healthy small businesses has already been in place since January this year."With Covid-19 continuing to disrupt normal functioning and cash flows, the stress in the MSME sector has got accentuated, warranting further support.

Accordingly, it has been decided that stressed MSME borrowers will be made eligible for restructuring their debt under the existing framework, provided their accounts with the concerned lender were classified as standard as on March 1, 2020.

This restructuring will have to be implemented by March 31, 2021," RBI governor Shaktikanta Das said, while making the announcement.The Finance Minister Nirmala Sitharaman had said last week that the government was working with the RBI on the industry's need for restructuring of loans to absorb the adverse impact of Covid-19 pandemic.