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The Reserve Bank of India (RBI) eased NPA classification norms for MSMEs facing input credit linkage and related issues. This has come as a major relief to the MSME sector.
In a tweet, Financial Services Secretary Rajiv Kumar said that to continue support to MSMEs, the RBI has revised NPA recognition for GST and non-GST MSMEs at 180 days for dues up to 31 December 2018; the government would taper the norms from 1 January 2019 to encourage MSMEs to register.
In February this year, the government permitted banks and Non-Banking Finance Companies (NBFCs) to temporarily classify their exposures to GST-registered MSMEs with aggregate credit facilities from these lenders up to INR 25 crore, according to a 180-day past due criterion.
The RBI in its monetary policy review said that this was one to make the transition of MSMEs to the
formalised sector easier after they register with the GST.
Banks and NBFCs would continue to classify eligible MSME accounts – standard as on 31 August 2017 – as standard, if payments due as on 1 September 2017 are paid within 180 days from the due date. The RBI added that considering the benefits from increasing formalisation of economy for financial stability, the 180-day past due criterion (for GST-registered MSMEs) should be aligned to the
existing norm of 90 days past due in a phased manner.[/vc_column_text][/vc_column][/vc_row]