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Govt considering to double time limit for declaring overdue MSMEs as NPA: MSME Sec

Updated: Apr 28, 2017 12:26:48pm
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Govt considering to double time limit for declaring overdue MSMEs as NPA: MSME Sec

New Delhi, Apr 28 (KNN) The Centre is exploring the possibility of increasing the prescribed 90-day limit to 180 days for banks to declare overdue MSMEs as Non-Performing Assets (NPAs) or as bad loans, KK Jalan, MSME Secretary said at the National MSME Board meeting. 

The Secretary further said that the issue is being taken into considering with priority as various industry bodies have been raising their concerns over the matter.

Kalraj Mishra, Union Minister for MSMEs who was chairing the meeting also emphasized the need to double to time limit. He said that the delayed payment provisions need to be revised and cabinet is considering the same.

Exhorting the need to increase the time limit, Debashis Bandhyopadhyay, a Senior Policy Expert with Fisme said that the 90 day limit has been a big issue for the MSME entrepreneurs; it is difficult for them to re-pay within that period. An increased time bracket will help the units become more stable and efficient.

In the meeting several industry bodies expressed that three month period is too short to declare a unit as Non-Performing, alternatively suggesting that the period must be increased by six months to one year as often payments get delayed

Among the other things discussed in the meeting, there were discussions on reports alleging that collateral-security-free loans up to 10 lakh rupees were not being provided to the micro units by the banks.

Responding to this Mishra appealed to the banks to make proper distinction between the revival and recovery of NPAs.

According to the data by the Reserve Bank, the number of sick MSMEs have gone up to 4,89,291 with dues amounting to 40,642 crores as loans to the banks. (KNN/ DA)

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