The Reserve Bank of India (RBI) on Wednesday extended the benefit of 180-days past due (dpd)-based classification of non-performing assets (NPAs) to all medium, small and micro enterprises (MSMEs). At present, banks and non-banking financial companies (NBFCs) are allowed to classify MSME exposures as NPA 180 days after the due date only if the firms are Goods and Services Tax (GST)-compliant.
The relaxation will be subject to the conditions that the aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower do not exceed Rs 25 crore as on May 31, 2018 and the borrower’s account was standard as on August 31, 2017. Also, the payments due from the borrower as on September 1, 2017 and falling due thereafter up to December 31, 2018 must be paid not later than 180 days from their original due date.
In respect of dues payable by GST-registered MSMEs from January 1, 2019 onwards, the 180-dpd criterion shall be aligned to the extant Income Recognition and Asset Classification (IRAC) norms in a phased manner. “However, for MSMEs that are not registered under GST as on December 31, 2018, the asset classification in respect of dues payable from January 1, 2019 onwards shall immediately revert to the extant IRAC norms,” the central bank said in a notification.