A month ahead of scheduled GST rollout, banks are still not over their IT issues

Certain Indian banks were of the view that the government would allow them centralised registration under the soon to be implemented goods and services tax (GST), but looks like they are in for a surprise.

As per rules, both public and private banks are now required to register in each state, which has forced them to change their front-end information technology (IT) systems.

While some of the bigger private and multinational banks had already begun doing so about four months ago in anticipation of such rule, some public sector banks, scheduled banks and smaller private banks have either started the process only about a week ago or are yet to begin.

State-owned banks including Bank of Baroda, Indian Overseas Bank, Vijaya Bank and Indian Bank and scheduled banks Saraswat Bank, RBL and DCB have also asked for proposals from IT companies to begin the process.

The main challenge for banks lies in the mandatory registration in each state, which would require maintaining state-wise revenue data and operating IT solutions so that invoices can be raised for their business clients.

As per experts, without these GST-compatible front-end IT systems, banks won't be able to raise invoices and customers may not get input credits.

"Those banks that had started earlier now stand to gain as they have had time to prepare well, both on the tax and IT front. The approach taken by the banks to become GST compliant could also be different, depending on the proportion of B2B (business to business) and B2C (business to customer) services, the product segments where they operate and the time when they started their GST preparation," MS Mani, Senior Director at Deloitte Haskins & Sells told ET.