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. RBI has observed 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 following
conditions:
(i)
The borrower is registered under the GST regime as on January 31, 2018.
(ii)
The aggregate exposure, including non-fund based facilities, of banks and
NBFCs, to the borrower does not exceed `
250 million as on January 31, 2018.
(iii)
The borrower’s account was standard as on August 31, 2017.
(iv) The 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.
(v)
A 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.
(vi) The 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
90/120 days, the same shall not be recognised on accrual basis
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