Retired Professor, National Institute of Bank Management, Pune
Online published on 10 October, 2018.
MSME sector in India is known for job creation. Hence, Government of India attaches more importance to promotion and development of micro, small and medium enterprises (MSMEs). For this purpose, bank credit is a critical input. Unfortunately, these enterprises suffer from need based finance. Consequently, the number of non performing assets (NPAs) in the MSME sector and also sick units is on the rise. Over the years, several initiatives have been taken up by both Government and Reserve Bank of India to frame new policy guidelines &schemes, strengthening institutional arrangements, revising lending norms. rationalising lending procedures and asking banks to adopt best practices. Yet, the problem remains unresolved. Consequently, MSMEs default the payment of interest and loan instalments and become NPAs. Towards this end, it calls for analysis of NPA portfolio of MSME sector and review loan recovery measures based on which suggestions are offered for better management of NPAs in the sector
Non performing asset, Sick unit, Need based finance, Credit gap, Non Legal and Legal measures, Debt restructuring, Rehabilitation, Compromise, Write off, Civil court, DRT, SARFAESI Act, IBC
