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

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more