New Delhi: The economic slowdown due to the ongoing Covid pandemic over the past two years has hit micro, small and medium-sized enterprises (MSMEs) the hardest, despite many plans and packages announced by the Reserve Bank of India (RBI) and the government . Thousands of MSMEs have either closed or fallen ill after the government announced a nationwide strict lockdown in March 2020 amid the Covid. According to the RBI, non-performing loans from MSMEs now account for 9.6 per cent of gross advances of Rs 17.33 crore, up from 8.2 per cent in September 2020.Also Read: RBI Directs Paytm Payments Bank to Stop Onboarding New Customers Immediately. Here’s why
According to a report in The Indian Express, MSMEs gross non-performing assets (NPAs) increased by Rs 20,000 crore to Rs 1,65,732 crore in September 2021 from Rs 1,45,673 crore in September 2020. As per RBI definition a The investment of a micro entity should not exceed Rs 1 crore and turnover should not exceed Rs 5 crore, investment of a small unit should not exceed Rs 10 crore and turnover should not exceed Rs 50 crore and investment of medium-sized company should not exceed Rs 50 crore and turnover should not exceed Rs 250 crore . Also read – Sensex could hit 75,000 by December 2022: report
In layman’s terms, a loan becomes a non-performing asset when principal or interest is past due after 90 days. Also Read – Now Make UPI Payments Without Internet, Smartphone. Here’s how
Among state-owned banks, as of September 2021, PNB had MSME NPAs of Rs. 25,893 crore, followed by State Bank of India at Rs. 24,394 crore, Union Bank at Rs. 22,297 crore and Canara Bank at Rs. according to the RBI.
The report in the publication further states that the increase in non-performing loans occurred even after the RBI announced four MSME loan restructuring plans in January 2019, February 2020, August 2020 and May 2021. 1,16,332 crore were restructured under these plans . According to the May 2021 circular issued by RBI, loans have been restructured for Rs 51,467 crore,” according to RBI’s Trend and progress of banking report.
MSME revitalization program launched by government and RBI
To revitalize MSME activities, the RBI and the government had previously introduced several measures including the Emergency Credit Line Guarantee Scheme (ECLGS), which provided Rs 3 crore unsecured loans to MSMEs and businesses.
Under the ECLGS, loans of Rs.282 crore have been sanctioned up to 12 November 2021, of which Rs.228 crore has been disbursed (Rs.194 crore from commercial banks, which is 20.6 per cent of the incremental credit during the period).
The RBI also expanded the scheme of one-off restructuring of loans to MSMEs without asset classification downgrade and allowed banks to lend to NBFCs (other than MFIs) for on-lending to agriculture, MSMEs and housing as senior sector lending (PSL). ).