AEPC asks government to protect MSMEs from being declared NPAs by banks

By

Isabelle Crossley

Published
Oct 16, 2019

The Apparel Export Promotion Council has asked the Union Government to protect micro, small, and medium enterprises struggling to repay loans by preventing banks from declaring them as non-performing assets.

The AEPC has asked the central government to come good on its promise to stop banks from naming MSMEs NPAs should they have a stressed loan account, TNN reported. Due to a downturn in the economy, a number of MSMEs are struggling to repay loans. The government’s Finance Ministry had announced that it will ask banks to give MSMEs until March 2020 before being named as a NPA and ask banks to recast the debts.

“The ministry further said several MSMEs want one-time settlement of outstanding dues, which should be settled expeditiously by the banks,” the AEPC’s chairman A Sakthivel told TNN. “The central government wants banks to recast MSME loans instead of declaring it as NPA.”

Sakthivel said that, despite the government’s directive to banks, they are still categorising stressed MSME accounts as NPAs. “Many industrial units are eligible to run if they are given a re-construction of loans with additional working capital, which can be evaluated and sanctioned on merit basis,” said Sakthivel. 

The Union Government has recently championed the MSME sector and declared it as the fuel for India’s next round of economic growth in its rush to become a $3 trillion economy. The AEPC has stated that government protection of MSMEs is vital to prevent clients from moving their businesses to other countries.