Providing major relief to the MSMEs, RBI today eased NPA classification norms for such units facing input credit linkages and associated issues.
“In continuation of support and relief to MSMEs, NPA recognition for GST and non-GST MSMEs now at 180 days for dues up to December 31, 2018. Tapering norm from January 1, 2019, to encourage GST registration” Financial Services Secretary Rajiv Kumar said in a tweet.
In February, banks and NBFCs were allowed to temporarily classify their exposures to the Goods and Services Tax (GST) registered Micro, Small and Medium Enterprises (MSMEs), having aggregate credit facilities from these lenders up to Rs 25 crore, as per a 180 day past due criterion.
“This was done with a view to easing the transition of MSMEs to the formalized sector post their registration under the GST,” RBI said in the monetary policy review.
“Having regard to the input credit linkages and associated issues, it has now been decided to temporarily allow banks and NBFCs to classify their exposure, as per the 180 days past due criterion, to all MSMEs with aggregate credit facilities up to the above limit, including those not registered under GST,” it said.
Accordingly, eligible MSME accounts, which were standard as on August 31, 2017, shall continue to be classified as standard by banks and NBFCs “if the payments due as on September 1, 2017, and falling due thereafter up to December 31, 2018, were/are paid not later than 180 days from their original due date”, it added.
It further said that in view of the benefits from increasing formalization of the economy for financial stability, the 180 days past due criterion — in respect of dues payable by GST registered MSMEs from January 1, 2019, onwards — should be aligned to the extant norm of 90 days past due in a phased manner.
For entities that do not get registered under GST by December 31, 2018, the asset classification in respect of dues payable from January 1, 2019, onwards shall immediately revert to the 90-day norm, it said.
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