New Delhi, Aug 16 (KNN) The micro, small and medium enterprises (MSMEs) are at a much worse situation at this stage than the power projects and for a much lesser fault of theirs, said Rajeev Kumar, Secretary, Department of Financial Services in a report submitted in the Parliament on Impact of RBI's Revised Framework for Resolution of Stressed Assets on NPAs in the Electricity Sector.

Highlighting the problem in formulating a separate framework for Resolution of Stressed Assets in Electricity Sector, Kumar argued that, "The possibility of the similar demands (of exemption from RBI's Guidelines) from similarly placed sectors cannot be ruled out. It could be shipping, cement, and more particularly MSMEs. MSMEs are at a much worse situation at this stage than these projects and for a much lesser fault of theirs. This demand can some from all those sectors. So, should we have a separate sector-specific NPA resolution regime or an overarching regime?”

The Reserve Bank of India (RBI) had in February this year come out with a revised stressed asset framework to ensure speedy resolution of bad loans in the future.

The Revised Framework stated that default of even a single day in payment of interest or principal amount would lead to formulation of resolution plan by the committee of creditors. This framework states that the resolution plan has to be implemented within 180 days, otherwise the stressed asset would end up with the National Company Law Tribunal (NCLT).

The MSME Pulse Second Quarter Edition released in June highlighted that MSME NPA rates have remained stable and range bound. In the Micro segment the NPA rate has moved from 8.9 % (in Mar’17) to 8.8 % (in Mar’18) .In SME segment the NPA rate hovered between 11.4% (in Mar’17) to 11.2 % (in Mar’18). Recognized NPA exposure for MSME is Rs 81,000 Crores as on March 18.

MSME Pulse is SIDBI’s joint endeavour with TransUnion CIBIL.

Mohammad Mustafa, Chairman and Managing Director, SIDBI had said in the report that “RBI’s dispensation to MSME which includes recognising NPA in 180 days as opposed to previous approach of tagging NPA in 90 days past due will bring relief to INR 15,000 crore of exposure.”

Meanwhile, the Parliamentary Committee on Energy had studied the impact of the circular on non-performing assets of electricity sector and tabled the report on Tuesday last week in Lok Sabha.

“The Committee feels that as a result of this Revised Framework, the Electricity Sector has been forced towards NPA,” the standing committee said.

Elaborating about the need for a separate framework for resolution of Stressed Assets in electricity Sector, Independent Power Producers deposed that: “RBI circular has not taken cognizance of the (ground realities of the Electricity Sector) and it is heavily framed in such a way that steel and all other industries have been put together and it tried to address every sector together.

But electricity is a very highly regulated sector. So, comparing this sector with other sectors and putting the same framework may not work. So, what we feel is that there should be a separate framework as far as the power sector is concerned. (KNN Bureau)