The News Scroll 01 February 2020  Last Updated at 2:31 pm | Source: PTI

Govt raises turnover threshold for audit of MSME accounts to Rs 5 cr

Govt raises turnover threshold for audit of MSME accounts to Rs 5 cr
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1970-01-01T05:30:00+0530
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New Delhi, Feb 1 (PTI) The government on Saturday unveiled measures aimed at facilitating growth of the country''s micro, small and medium enterprises including raising the turnover threshold for audit of their accounts to Rs 5 crore and a scheme to provide subordinate debt to MSME entrepreneurs.

"Currently, only businesses having a turnover of more than Rs 1 crore are required to get their books of accounts audited by an accountant. In order to reduce compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector, I propose to raise by five times the turnover threshold for audit from the existing rupees one crore to five crore," Finance Minister Nirmala Sitharaman said while presenting the Budget 2020-21.

She said a scheme will be introduced to provide subordinate debt to MSME entrepreneurs.

Besides, the government has also asked the Reserve Bank to extend the debt restructuring window for micro, small and medium enterprises by a year to March 31, 2021, Sitharaman said.

"An app-based invoice financing loans product will be launched. This will obviate the problem of delayed payments and consequential cash flow mismatches for the MSMEs," said the Finance Minister.

She said, necessary amendments will be made to the Factor Regulation Act 2011 to enable non banking financial companies (NBFCs) to extend invoice financing to the MSMEs through TReDS, thereby enhancing the economic and financial sustainability.

"Working capital credit remains a major issue for MSMEs. It is proposed to introduce a scheme to provide subordinate debt for entrepreneurs of MSMEs. This subordinate debt to be provided by banks would count as quasi equity and would be fully guaranteed through the Credit Guarantee Trust for the Medium and Small Entrepreneurs," Sitharaman observed.

TReDS is an institutional mechanism to facilitate the trade receivable financing of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers.

Highlighting that more than five lakh MSMEs have permitted from restructuring of debt permitted by RBI in the last year, she said the restructuring window was to end on March 31, 2020, but the government has asked RBI to consider extending this window till March 31, 2021. PTI RSN DRR


Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI
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