The Reserve Bank of India (RBI) on Tuesday offered a new year gift to micro, small and medium enterprises (MSMEs) by allowing a one-time restructuring of existing loans that are in default but \u201cstandard\u201d as on January 1. The facility could provide a timely support to scores of MSMEs hit by the double whammy of note ban and GST. To be eligible for the scheme, the aggregate exposure, including non-fund based facilities of banks and NBFCs, to a borrower should not exceed `25 crore as of Tuesday, the central bank said in a statement. The restructuring has to be implemented by March 31, 2020. \u201cA provision of 5% in addition to the provisions already held, shall be made in respect of accounts restructured under this scheme,\u201d the RBI said. The move signals a thaw in the relations between the government and the central bank under new governor Shaktikanta Das. Facilitating greater and smoother credit to MSMEs was one of the contentious issues between the government and the RBI under former governor Urjit Patel. \u201cMSMEs form an important component of the Indian economy and contribute significantly to the country\u2019s GDP, exports, industrial output, employment generation,\u201d the central bank said. \u201cConsidering the importance of MSMEs in the Indian economy, it is considered necessary at this juncture to take certain measures for creating an enabling environment for the sector,\u201d the RBI said. The issue of restructuring of MSME accounts was discussed in the meeting of the central board of the RBI on November 19, 2018. The matter was also discussed during RBI\u2019s recent interactions with the banks and other stakeholders. The Narendra Modi government is keen to salvage the crisis in the MSME sector. It is planning to raise the GST exemption threshold to `75 lakh or thereabouts from `20 lakh at present, in a move that would make it optional for lakhs of units on whether to be under the ambit of the tax. Modi in November launched a scheme for MSMEs to avail of loans in 59 minutes, as the government sought to step up focus on this sector that creates massive jobs and accounts for a sizeable chunk of exports. Under this scheme, state-run banks have given in-principle approval to 1.12 lakh loan applications ofMSMEs, totalling Rs 37,412 crore since then. Each bank\/NBFC should formulate a policy for the new scheme with board approval which shall, inter alia, include framework for viability assessment of the stressed accounts and regular monitoring of the restructured accounts. As per the RBI's Financial Stability Report (FSR) for December 2018, the share of non-performing assets (NPAs) in the micro enterprises portfolio was 11.5% and that in the SME segment was 8.7% at the end of May 2018. In May 2017, the figures were 11.2% and 8.9%, respectively.