As we all know, MSME’s are the back bone of our economy, but of-late these units are facing financial distress due to major economic changes/ disruptions in our economy.
Taking cognizance of the MSME issues, government has undertaken important steps which are being highlighted as follows for your ready reference:
RBI enhances NPA recognition Period for GST Registered MSMEs borrowers from 90 to 180 days.
In a major relief to the medium and small enterprises sector, the RBI has issued Notification no. RBI/2017-18/129 DBR.No.BP.BC.100/21.04.048/2017-18 February 07, 2018 wherein GST-registered MSME borrowers will get a further 180-day window to pay dues if their accounts were standard as on August 31, 2017.
This relaxation will be applicable for dues between September 2017 and January 2018 if the aggregate exposure does not exceed Rs 25 crore. Banks and NBFCs will not be required to downgrade asset classification of these MSMEs. For further details, members may refer to RBI notification using below link.
Government to amend MSME criteria based on Annual Revenue
We understand that the Cabinet has approved proposal to redefine micro, small and medium enterprises, or MSMEs, based on their annual revenue, replacing the current definition that relies on self-declared investment on plant and machinery.
Section 7 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 will accordingly be amended to define units producing goods and rendering services in terms of annual turnover as follows:
A micro enterprise will be defined as a unit where the annual turnover does not exceed five crore rupees;
A small enterprise will be defined as a unit where the annual turnover is more than five crore rupees but does not exceed Rs 75 crore;
A medium enterprise will be defined as a unit where the annual turnover is more than seventy five crore rupees but does not exceed Rs 250 crore.
At present the MSMED Act (Section 7) classifies the Micro, Small and Medium Enterprises (MSMEs) on the basis of investment in plant and machinery for manufacturing units, and investment in equipment for service enterprises. The criterion of investment in plant and machinery stipulates self-declaration which in turn entails verification if deemed necessary and leads to transaction costs.
MSME Members are requested to take note of these important updates and do the needful, wherever applicable. Feed-backs on these changes can be sent on firstname.lastname@example.org & email@example.com .