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Businesses not Under GST to Get 180 Days to Pay Back Their Loans

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 Businesses not Under GST to Get 180 Days to Pay Back Their Loans
In a temporary relief to small businesses not registered under the Goods and Services Tax, the Reserve Bank of India on Wednesday extended loan repayments deadline to 180 days from the due date without being classified as a non-performing asset. This latest announcement comes after the regulator’s April diktat which had allowed GST registered MSME borrowers with a turnover of up to ?25 crore to delay loan repayments by 180 days. “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 (up to ?25 crore), including those not registered under GST,” the RBI said.
The central bank has been facing demands that it remains lenient on the medium and small enterprises as it is the biggest employer and is facing severe pressures from the implementation of the GST which has disrupted the economic landscape in which they operate. MSME accounts which were standard as on August 31, 2017 and where outstanding credit till January 31, 2017 did not exceed ?25 crore will be eligible for the relief, the regulator stated. As per the current norms, banks and NBFCs classify an account as non-performing if they fail to repay a loan within 90 days.
The central bank’s relaxation comes as encouragement of transfer to the GST payments mechanism would bring in benefits of the formalisation of the economy including better tax compliance.“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, shall be aligned to the extant norm of 90 day past due in a phased manner, whereas for entities that do not get registered under GST by December 31, 2018, the asset classification in respect of dues payable from Jan 1, 2019 onwards shall immediately revert to the 90 day norm,’’ the RBI said.
The Economic Times, New Delhi, 07th June 2018

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