Skip to main content

Relief for MSMEs hit by GST

By
Relief for MSMEs hit by GST
The Reserve Bank of India (RBI) has announced two relief measures for micro, small and medium enterprises (MSMEs) by providing them additional time to repay banks, and removing the credit limit on MSMEs in the services sector, which falls under the priority sector.
The central bank has instructed banks and nonbanking financial companies (NBFCs) to allow MSMEs registered under the goods and services tax (GST) to repay their dues occurring between September 1, 2017, and January 31, 2018, within 180 days of their due date. This extension is applicable only to MSMEs, which were standard as of August 31, 2017, and for which the aggregate exposure does not exceed Rs 250 million as of January 31.
“The formalisation of business through registration under the GST adversely impacted cash flows of the smaller entities during the transition phase, with consequent difficulties in meeting their repayment obligations to banks and nonbanking financial companies,” the RBI said in its ´Statement on Developmental and Regulatory Policies´.
RBI Deputy Governor NS Vishwanathan, at the monetary policy press meet, said this relief was not applicable to payments due in the future but only to those which were overdue.The relief was very clearly targeted.Bankers welcomed the move, saying this extension would benefit both MSMEs, by giving them some breathing space, as well as banks, by reducing addition to slippages.
“The for bearance on NPAs (non performing assets) will go along way towards improving their (MSMEs´) cash flows and will in turn help banks in managing delinquency levels,” said Dinabandhu Mohapatra, managing director and chief executive, Bank of India.
All bank loans to MSMEs would now qualify under priority sector lending without any credit caps, the central bank said. It has removed the currently applicable loan limits of Rs 50 million and Rs 100 million per borrower to service MSMEs for classification under the priority sector.
Mohapatra said the removal of the credit cap would “help banks seamlessly increase their priority sector lending portfolio, besides sparing the need to park funds under the Rural Infrastructure Development Fund atalow rate of return”.Meanwhile, the RBI also set subtargets for lending to the priority sector for foreign banks with 20 branches or more for FY201819.
Foreign banks´ lending to MSMEs will have to be 8 per cent of the adjusted net bank credit, or 7.5 per cent of a credit equivalent amount of off balance sheet exposure, whichever is higher
The Business Standard, New Delhi, 08th February 2018

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more