NPAs in MSME jumps to 20.7 per cent, says report

Ahmedabad, Dec 26 (KNN) Repayment issues, bad loans amid economic slowdown, have caused Non Performing Assests (NPAs) in Micro Small and Medium Enterprises (MSME) sector to rise up by 20.7%, said report.

According to the latest State Level Bankers’ Committee (SLBC) report released on Tuesday, non-performing assets (NPAs) in the second quarter went up by 20.7%, growing from Rs 8,526 crore in 2018-19 to Rs 10,290 crore this year.

As per the bankers, the growth is already muted in the economy, and with demand remaining low-key, slowing growth have caused bad loans to rise.

The advances in the MSME sector grew merely 11.4%, from Rs 1.15 lakh crore in 2018-19 to Rs 1.28 lakh crore in 2019-20 as the bad loans rose by 20.7% in the second quarter.

MSMEs in sectors including automobiles, auto ancillaries, steel and textiles, are among the worst affected. Liquidity crisis too remain one the reason due to which bad loan rose, blamed Industry players.

Slowdown, forced to stop operations or cut production, which effected working capital. With the liquidity crunch created by the collapse of major Non-Banking Finance Companies (NBFCs), there is a huge vacuum when it comes to working capital financing of MSMEs.

The SLBC report for Gujarat further showed that the percentage of NPAs among loans given for housing and education rose to 1.17 per cent and three per cent respectively.

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