RBI Eases NPA Norms Considering MSMEs' Perspective

Giving a little bit of relief to all micro, small and medium (MSMEs), the Reserve Bank of India (RBI) eased loan-repayment norms for the sector.

To give relief to MSMEs that have been affected due to implementation of the Goods and Services Tax regime, the central bank eased NPA classification norms for such units facing input credit linkages and associated issues.

"This was done with a view to ease the transition of MSMEs to the formalised 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 day 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.

In view of the benefits from increasing formalisation of the economy for financial stability, the 180 day 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 day 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.

Financial Services Secretary Rajiv Kumar said in a tweet, "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."