MSMEs welcome RBI's decision to give relief to GST hit industries

New Delhi, Feb 8 (KNN) Eyeing at facilitating relief to the Micro, Small and Medium Enterprises (MSMEs) impacted by the teething effects of Goods and Services Tax (GST), the Reserve Bank announced extension up to 180 days to clear the dues to banks, a move that is being welcomed by the sector.

Talking to KNN, Sunil Vaish, President of MSME Body Indian Industries Association (IIA) said that the decision comes as a very positive step for the MSMEs that have been demanding such extension since long.

He informed that the earlier limit of 90 days was a pain for the MSMEs, not being able to make the  repayment in the 90 day time period brought in a negative impression for the unit that failed to do so, affecting prospects for seeking loan in the future.

“For a micro unit, the process of processing the supplies and obtaining payment itself takes nearly 90 days, therefore even if the unit is in a position to ay by then, it has already crossed the set date”, Vaish said.

Vaish informed that the majority of the NPAs by the MSMEs used to happen because of the 90 day time crunch and with the government announcing the extension, the NPAs are to come down substantially.

This will further have a rippling effect and the industry will be able to expand its operation not having to fear of getting declared as non-viable, Vaish added.

The RBI on Wednesday announced a slew of measures for MSMEs, impacted by GST rollout and demonetisation, and gave them additional up to 180 days to clear their dues to banks.

RBI Deputy Governor NS Vishwanathan in a press interview said that the formalisation of business through registration under GST adversely impacted cash flows of the smaller entities during the transition phase with consequent difficulties in meeting their repayment obligations to banks and NBFCs, therefore RBI has come up with the extension. (KNN/DA)