All banks and NBFCs regulated by
the Reserve Bank of India
Madam / Dear Sir,
Relief for MSME Borrowers
registered under Goods and Services Tax (GST)
Presently, banks and NBFCs in
India generally classify a loan account as Non-Performing Asset (NPA) based
on 90 day and 120 day delinquency norms, respectively. It has been
represented to us that formalisation of business through registration under
GST had adversely impacted the cash flows of the smaller entities during
the transition phase with consequent difficulties in meeting their
repayment obligations to banks and NBFCs. As a measure of support to these
entities in their transition to a formalised business environment, it has
been decided that the exposure of banks and NBFCs to a borrower classified
as micro, small and medium enterprise under the Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006, shall continue to be classified
as a standard asset in the books of banks and NBFCs subject to the
borrower is registered under the GST regime as on January 31, 2018.
aggregate exposure, including non-fund based facilities, of banks and
NBFCs, to the borrower does not exceed ? 250 million as on January 31,
borrower’s account was standard as on August 31, 2017.
amount from the borrower overdue as on September 1, 2017 and payments from
the borrower due between September 1, 2017 and January 31, 2018 are paid
not later than 180 days from their respective original due dates.
provision of 5% shall be made by the banks/NBFCs against the exposures not
classified as NPA in terms of this circular. The provision in respect of
the account may be reversed as and when no amount is overdue beyond the
90/1201 day norm, as the case may be.
additional time is being provided for the purpose of asset classification
only and not for income recognition, i.e., if the interest from the
borrower is overdue for more than 90/1202 days, the same shall not be recognised on accrual
(S. K. Kar)
Chief General Manager