Empowering MSMEs with News & Insights

Eligibility for restructuring MSME loans without GST-registration to be determined on basis of exemption limit obtaining as on Jan 1, 2019: RBI

Updated: Feb 25, 2019 08:33:11am
image

Eligibility for restructuring MSME loans without GST-registration to be determined on basis of exemption limit obtaining as on Jan 1, 2019: RBI

Mumbai, Feb 25 (KNN) The Reserve Bank of India (RBI) has clarified that the eligibility for restructuring without GST-registration should be determined on the basis of exemption limit obtaining as on the date of the its circular, i.e., January 1, 2019.

In a notification to Non-Banking Financial Companies (NBFCs) and banks, RBI said, “One of the conditions for restructuring of existing loan of MSMEs without a downgrade in the asset classification is as under:

“the borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration” (c.f. para 1 (iii) of the above referred circular).”

It is clarified that the eligibility for restructuring without GST-registration, as per the circular under reference, should be determined on the basis of exemption limit obtaining as on the date of the aforesaid circular, i.e., January 1, 2019, the RBI notification added.

On January 1, 2019, the Reserve Bank had allowed a one-time restructuring of existing debt up to Rs 25 crore for the companies which have defaulted on payment but the loans given to them have continued to be classified as standard assets.

To be eligible for the scheme, the aggregate exposure, including non-fund based facilities of banks and NBFCs, to a borrower should not exceed Rs 25 crore as on January 1, 2019, and the restructuring has to be implemented by March 31, 2020.

As per the notification, "A provision of 5 per cent in addition to the provisions already held, shall be made in respect of accounts restructured under this scheme. Each bank/NBFC should formulate a policy for this scheme with board approval which shall, inter alia, include framework for viability assessment of the stressed accounts and regular monitoring of the restructured accounts."

The notification said that the borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. (KNN Bureau)

COMMENTS

    Be first to give your comments.

LEAVE A REPLY

Required fields are marked *