The government today extended the deadline for small businesses to opt for the composition scheme in the GST regime by nearly four weeks to August 16.
The government today extended the deadline for small businesses to opt for the composition scheme in the GST regime by nearly four weeks to August 16.
Small businesses with turnover of up to Rs 75 lakh earlier had time till today to opt for the scheme in the Goods and Services Tax regime. “The Board hereby extends the period for filing an intimation in Form GST CMP-01… up to August 16, 2017,” the Central Board of Excise and Customs (CBEC) said in an office order.
To opt for composition scheme, the taxpayer needs to log into his account at the GST Portal www.gst.gov.in and select ‘Application to opt for the Composition Scheme’ under ‘Services’ menu. They have to fill up the Form GST CMP-01 to opt for the scheme.
Under composition scheme, traders, manufacturers and restaurants can pay tax at 1, 2 and 5 per cent, respectively. Businesses opting for the composition scheme will see a lesser compliance burden as they will have to file returns only once in a quarter as against monthly returns to be filed by other businesses.
There are over 70 lakh excise, VAT and service taxpayers who have migrated to the GSTN portal for filing returns in the GST regime which kicked in from July 1. Besides, there are over 8 lakh new taxpayers who have registered on the portal. These new registered taxpayers can opt for the composition scheme at the time of registration.
YES Bank has teamed up with the Overseas Private Investment Corporation (OPIC) and Wells Fargo on an agreement to lend up to $150 million to small and medium enterprises (SMEs) in India.
Under the agreement, OPIC will provide $75 million in financing and up to $75 million in syndicated financing jointly with Wells Fargo to YES Bank.
Specifically, $50 million of the financing will be used to expand support to women-owned businesses, while another $50 million will be used for financing SME businesses in low-income States, YES Bank said in a statement.
It added that this will ensure access to funding for women-owned businesses and SMEs in India.
OPIC is the US government’s development finance institution. San Francisco-headquartered Wells Fargo is a diversified, community-based financial services company with $2 trillion in assets.
Rana Kapoor, Managing Director and CEO, YES Bank, said: “This facility will support financing to women entrepreneurs in India for driving future economic growth and job creation.”
Dev Jagadesan, OPIC’s Acting President and CEO, said, “OPIC’s facility will help YES Bank expand its SME lending capacity, specifically enabling them to reach both women and entrepreneurs in low-income States who have much to contribute to India’s economic activity.”
According to the statement, this is the third transaction between OPIC and YES Bank and comes close on the heels of last year’s $265-million OPIC facility, which the bank will use to extend SME financing in India.
The private sector bank said it has also partnered with International Finance Corporation and Women Entrepreneurs Opportunity Facility by drawing a $50-million loan in March 2016 for mobilising capital for women entrepreneurs.
Small businesses with turnover of up to Rs. 75 lakh have time till July 21 to opt for composition scheme under the Goods and Services Tax regime, GST Network said.
To opt for composition scheme, the taxpayer needs to log into his account at the GST Portal www.gst.gov.in and select ’Application to opt for the Composition Scheme’ under ’Services’ menu, a GSTN statement said.
“Any person who has been granted registration on a provisional basis and has turnover not exceeding Rs. 75 lakh, and who wishes to opt for the composition levy, is required to electronically file an intimation, duly signed or verified through EVC, at the GST portal on or before July 21, 2017,” GSTN Chairman Navin Kumar said.
Under composition scheme, traders, manufacturers and restaurants can pay tax at one per cent, two per cent and five per cent, respectively in the new indirect tax regime.
Businesses opting for composition scheme will see a lesser compliance burden as they will have to file returns only once in a quarter as against monthly returns to be filed by other businesses.
There are over 69 lakh excise, VAT and service taxpayers who have migrated to the GSTN portal for filing returns in the GST regime which ushered in on July 1.
Besides, there are over 4.5 lakh new taxpayers who have registered in the portal. These new registered taxpayers can opt for the composition scheme at the time of registration.
GSTN also clarified that taxpayers who have been given provisional IDs must complete all parts of the enrolment at the GST portal and submit the same along with the required documents with digital signature or EVC.
Once the form is completed and submitted, the enrolled taxpayer will be issued the final Certificate of Registration which would mark completion of migration under GST.
In case an enrolled taxpayer fails to submit the duly filled form with the requisite documents, his provisional registration is liable to be cancelled.
“A period of three months is allowed to complete the enrolment procedure by September 22, 2017. In the interim, they can issue tax invoice using the provisional ID already allotted to them,” Kumar said.
The Reserve Bank of India (RBI) is looking into a request to extend the classification period for non-performing assets (NPAs) to help small and medium enterprises (SMEs).
“Some people have made representation to the finance ministry of raising the NPA classification period beyond existing 90 days. This issue is under consideration. It is being examined by the RBI,” Minister of State for Finance Arjun Ram Meghwal told newswire PTI.
Summary
RBI looking at request to raise the NPA classification period beyond the current level.
Currently, an account turns into NPA or bad loan if it is not serviced for 90 days.
In case of small businesses and SMEs, payments come usually late.
Currently, an account turns into a non-performing asset (NPA) or bad loan if it is not serviced for 90 days.In case of small businesses and SMEs, payments come usually late. Once they miss the 90-day period and fall in the NPA category, their credit line is cut.
In the absence of vibrant factoring or trade receivable market, small businesses and SMEs face the issue of timely credit availability. Meghwal also said that there is a need to strengthen loan restructuring mechanism in an effort to tackle inflation.
Loan restructuring is reviewed by the RBI from time to time as part of its effort to fight the mounting NPAs in the banking system.
Most recently, the minister said, the government brought in an ordinance giving wide-ranging legislative powers to the Reserve Bank to fight NPAs.
The ordinance authorises RBI to issue directions to any bank to initiate insolvency resolution process in the event of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016.
As per some estimates, banks are sitting on unrecognised stressed loans worth Rs 7.7 lakh crore in corporate and SME sectors and expect around 35 per cent of them to slip into the NPA category in the next 12-18 months.
There is a likelihood of Rs 2.6 lakh crore of corporate and SME loans, which are 3.2 per cent of total bank credit to be recognised as stressed loans by 2019.
Stressed loans include restructured assets that carry the risk of turning into NPAs.
Bandhan Bank’s net interest income stood at Rs 2,403.50 crore in the financial year 2017
Bandhan Bank on Thursday reported a net profit of Rs1,111.95 crore for the financial year that ended on 31 March. A comparable year-ago figure wasn’t available because the lender started operations only in August 2015.
Net interest income, or the core income a bank earns by giving loans, was Rs2,403.50 crore. Gross advances were Rs23,543.29 crore and deposits stood at Rs23,229 crore.
Current and savings accounts at the end of the March quarter made up 29.43% of deposits. Bandhan Bank’s capital adequacy ratio, an indicator of financial strength expressed as a ratio of capital to risk-weighted assets, was 26.36%. The bank has 840 branches and 10.5 million customers.
Bandhan Bank, which converted from a microfinance institution to a full-fledged lender, kept its focus on borrowers who make up more than 90% of its loan book. Going forward, the bank intends to diversify into affordable housing and loans to micro enterprises.
According to Chandra Shekhar Ghosh, founding managing director and chief executive officer of Bandhan Bank, deposit and credit growth for the bank will continue to grow at 30%.
In the financial year 2016-17, the bank sold inter-bank participatory certificates worth Rs6,704.21 crore, which helped the bank boost its net interest margin.
The net interest margin, the difference between the rate a bank charges for loans and pays for deposits, for the year was close to 10%.
Under the inter-bank participatory certificates arrangement, banks can sell a part of their portfolio to other banks that are short of their targets for lending to the priority sector that includes agriculture and small businesses.
High margins and volumes are two reasons why banks are exploring the market in thrift credit
From being passive lenders to microfinance institutions (MFIs) till about five years earlier, banks have turned out to be active players in the business of small loans.
As on end-December 2016, banks accounted for 37 per cent (Rs 36,683 crore) of microfinance portfolio of Rs 98,625 crore; five years earlier, a handful of MFIs accounted for more than half.
High margins and volumes are two reasons why banks are exploring the market in thrift credit.
Most of them in MFI lending are private sector ones. A majority of this portfolio is with 11 banks — Axis, Bandhan, DCB, Equitas, HDFC, ICICI, IDFC, Kotak Mahindra, RBL and YES.
This apart, several public sector banks have increased their MFI exposure, through business correspondents (BCs).
“We see a lot of synergies with the microfinance sector. More, it is quite well-regulated and growing at a fast rate, providing a lot of business opportunities,” said an official in charge of a bank’s microfinance operations.
Also, over the past 18 months, banks have also been aggressive in taking equity stakes in MFIs. Last year, Kotak Mahindra Bank acquired Bengaluru-based BSS Microfinance.
RBL acquired 10 per cent in Utkarsh Micro Finance, which recently graduated into a small finance bank (SFB).
In July last year, IDFC Bank acquired Trichy-based Grama Vidiyal Microfinance, its second deal in the MFI space. Earlier, IDFC had taken 10 per cent in east-based ASA International India Microfinance.
In March last year, DCB Bank had acquired a 5.81 per cent stake in Odisha-based Annapurna Microfinance. Earlier, RBL had acquired 30 per cent in Swadhaar FinServe, a company acting as a BC.
Non-banking financial companies (NBFCs) have also shown interest. In 2015, Manappuram Finance had acquired Asirvad Micro Finance, a Chennai-based NBFC-MFI.
With a number of MFIs graduating to SFBs, the number in the MFI space is likely to further increase. And, even after graduating into a bank, they are likely to keep much of their lending to microfinance. Bandhan Bank, earlier an MFI, has even after close to two years into operation as a bank still got over 80 per cent of its lending portfolio concentrated in microfinance.
“Over the past three years, banks have shown a high level of interest in microfinance, part of a diversification strategy. Also, at least for two to three years, the new SFBs are likely to focus on microfinance as they build their deposit base,” says Ratna Vishwanathan, chief executive officer, Microfinance Institutions Network.
Seven of the proposed SFBs, some of which have transformed to a bank, together account for 46 per cent of the MFI portfolio, amounting to Rs 26,228 crore.
After years of subdued growth, the Indian microfinance (MFI) industry expanded more than 60% to Rs54,329 crore in 2015-16 compared to the previous year, according to a report prepared by Sa-Dhan, the self regulatory organisation of MFIs.
The MFI client base expanded by 2.8 million in the year, taking the total number of clients to 39.9 million, said the report. This growth was despite the fact that Bandhan, which was the largest MFI, moved out of the space to become a full fledged bank.
The top 10 MFIs classified as non-banking financial companies (NBFCs) accounted for about 80% of the total gross loan value, the report said. They include Janalakshmi Financial Services Ltd, Ujjivan Financial Services Ltd and SKS Microfinance Ltd.
“Attaining over 28 lakh clients is no mean feat. This goes on to show that the microfinance industry, having reached its inflection point, is growing steadfastly,” P. Sathish, executive director of Sa-Dhan, said.
The MFI sector experienced a crisis after Andhra Pradesh, the biggest market for small loans made to the unbanked poor and self-employed, in 2010 clamped down on micro lenders.
The state government tightened regulations governing MFIs after reports surfaced that coercive loan recovery practices by the lenders had driven some overextended borrowers to commit suicide. That led to a shrinking of the asset base of the microfinance industry and a surge in bad loans.
Of the total client base of 39.9 million, the southern region alone contributed to 39% of the total client base. Kerala and Karnataka now have the maximum number of MFI branches.
The growth in this sector is also due to Reserve Bank of India allowing many NBFC-MFIs to act as banking correspondents (BCS) connecting commercial banks with customers in small towns and rural areas.
“The MFIs are finding the BC model rather attractive on the credit side,” Sathish added.
The report also claims that 94% of the total loans taken from MFIs are for income generating activities, dominated by agriculture and animal husbandry.
