Insolvency and Bankruptcy Board of India has published draft rules dealing with insolvency resolution process of individuals and firms on its website . The existing insolvency and bankruptcy code, at present, applies only to corporate defaulters
The government on Tuesday expanded the scope of the new insolvency rules to bring individual businesses under its purview.
On Tuesday, the Insolvency and Bankruptcy Board of India (IBBI) published the draft rules dealing with insolvency resolution process of individuals and firms on its website (www.ibbi.gov.in) ; public comments can be submitted till 31 October.
Once notified, even individual businesses such as proprietorships will come under the bankruptcy regime. This will enable an orderly bankruptcy resolution within the purview of a transparent rules-based regime. The existing insolvency and bankruptcy code, at present, applies only to corporate defaulters.
“These rules shall apply to matters relating to the insolvency resolution process for individuals and firms under Part III of the code,” said the draft rules issued by IBBI.
Part III of the Insolvency and Bankruptcy Code, 2016, deals with insolvency and bankruptcy of individuals and partnership firms.
According to a statement issued by IBBI on Tuesday, the draft rules and regulations have been submitted by a working group which was formed to recommend the strategy and approach for implementation of the provisions of the Insolvency and Bankruptcy Code, 2016, dealing with insolvency and bankruptcy in respect of guarantors to corporate debtors, i.e., personal guarantors, and individuals having businesses.
“So far, the rules were only in respect of the Corporate Insolvency Resolution Process (CIRP) and the rules concerning individuals and partnership firms were yet to come,” said Satwinder Singh, partner at Vaish Associates, a law firm. “The jurisdiction for corporate, companies, limited liability partnership (LLP) lies before the National Company Law Tribunal (NCLT) and with the Debt Recovery Tribunal (DRT) for individuals and firms. The provisions relating to insolvency and bankruptcy of individuals and firms had not been notified earlier, so now the IBBI has come out with the draft rules.”
Harsh Pais, partner at law firm Trilegal, said, “It is a positive step towards consolidating the bankruptcy regime for individuals, for whom there was no systematic approach previously. For companies, at least there was recourse to the Companies Act, whereas for individuals there were only some archaic laws from the early 1900s, which were hardly relied upon in practice.”
Most of the small and medium enterprises (SMEs) take the legal form of either partnership or proprietorship firms. Though the loans are smaller in value, SME borrowers far outnumber companies, resulting in their borrowings exerting a significant influence in the financial sector’s stability.
Bankruptcy resolution is high on the agenda of the central government, which is keen to improve the ease of doing business in India and attract more private investments from domestic and overseas sources. An efficient exit route from failed projects is an essential factor that lenders consider before participating in projects.
GST Council has considered the implementation experience of the last 3 months and gave relief to small traders, says Arun jaitley.
More than three months after the Goods and Services (GST) was introduced, the GST Council made a number of big changes today, to give some relief to small and medium businesses (SMEs) on filing and payment of taxes. The panel also eased rules for exporters and cut tax rates on some items. Those businesses with annual turnover of up to Rs 1.5 crore and which constitute 90 percent of the taxpayer base but pay only 5-6 percent of overall tax, have been permitted to file quarterly income returns. “GST Council has considered the implementation experience of the last 3 months and gave relief to small traders… Compliance burden of medium and small taxpayers in GST has been reduced,” Finance Minister Arun Jaitley said. The SMEs had earlier complained of tedious compliance burden under the new regime. Below is the full text of the recommends made by GST today:
The GST Council, in its 22nd Meeting which was held today in the national capital under Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley has recommended the following facilitative changes to ease the burden of compliance on small and medium businesses:
Composition Scheme
1. The composition scheme shall be made available to taxpayers having annual aggregate turnover of up to Rs. 1 crore as compared to the current turnover threshold of Rs. 75 lacs. This threshold of turnover for special category States, except Jammu & Kashmir and Uttarakhand, shall be increased to Rs. 75 lacs from Rs. 50 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand shall be Rs. 1 crore. The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018. The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised. New entrants to this scheme shall have to file the return in FORM GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period. The increase in the turnover threshold will make it possible for greater number of taxpayers to avail the benefit of easier compliance under the composition scheme and is expected to greatly benefit the MSME sector.
2. Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.
3. A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.
Relief for Small and Medium Enterprises
4. Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.
5. To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs. 1.5 crores, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis, starting from the Third Quarter of this Financial Year i.e. October-December, 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December, 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September, 2017 will be announced in due course.
6. The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31.03.2018 and will be reviewed by a committee of experts. This will benefit small businesses and substantially reduce compliance costs.
7. The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.
8. It has come to light that Goods Transport Agencies (GTAs) are not willing to provide services to unregistered persons. In order to remove the hardship being faced by small unregistered businesses on this account, the services provided by a GTA to an unregistered person shall be exempted from GST.
Other Facilitation Measures
9. After assessing the readiness of the trade, industry and Government departments, it has been decided that registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.
10. The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018. This is in order to give trade and industry more time to acclimatize itself with the GST regime.
11. The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15.11.2017. Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15.11.2017.
12. Invoice Rules are being modified to provide relief to certain classes of registered persons.
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.
