New Delhi, Mar 20 (KNN) Payment of three instalments at a time is really difficult for micro, small & medium enterprises (MSMEs) going through a bad business cycle, opined Arundhati Bhattacharya, SBI Chairperson.

She was commenting on the current NPA situation and the approach the largest Bank of India in this regard at a candid TV interview.

According to the ‘framework  for revival’ stipulated by RBI, any MSME account going default for three consecutive months should be taken as a potent NPA case, special mention account (SMA) in RBI terms, and Banks should start diagnostic process for its revival.

While the RBI guidelines talk of an immediate diagnostic approach, Banks simply stop all transaction s against such MSME accounts in their zeal to contain NPAs.

So after two difficult months due to a bad business cycle, an MSME has to pay all three pending instalment together, if it wants to remain outside SMA and run the business.

Bhattacharya’s opinion is,it is very difficult for an MSME  to pay the three instalments together and she even indicated that Banks approached the RBI to ‘back end’ the two pending instalments.

Interestingly, while the MSME fraternity is continuously expressing their strong opposition against the impractical and draconian approach of the RBI since inception of the concept of SMAs, for the first time the banks have started reacting to the rigid approach of the banking regulator.

About a year back, KNN reported strong resentment of Federation of Indian Micro and Small & Medium Enterprises (FISME), the lead MSME body, about the SMA rating approach.

“How unrealistic it is to term an MSME account SMA for not paying loan instalment within 30~90 days when most of their buyers whether public or large private sector companies seldom pay them before 180 days” commented  Neeraj Kedia,  Chairman of Banking Committee, of FISME.            

Almost echoing what Mrs Bhattacharya said now, an expert of FISME mentioned that  “Earlier if there were genuine delays in payment, Banks used to be considerate but after fresh RBI guidelines 2015, Banks would not listen and mark the account SMA putting all facilities to a standstill.” 

“SBI Chairperson has claimed earlier to be holding nearly half of the total MSME loan portfolio of nearly 4000 crores and we hope the Government and RBI will listen to her valuable suggestions on SMA norms”, commented Anil Bhardwaj, Secretary General, FISME.

In fact, in her no holds barred interview given to  a news channel, Mrs Bhattacharya systematically brought down  the key anti – NPA measures of the earlier RBI Governor, Dr. Raghuram Rajan.

While completely going against the SMA rating approach of Dr. Rajan, Bhattacharya also strongly criticised the SDR or Strategic Debt Restructure concept of the earlier RBI Governor to clean the large default account.

The key approach of SBI Chairperson during the entire conversation was that Banks should be given a free hand in tackling their assets and liabilities with the regulator having the minimal role in prescribing.

Exactly this is the approach of the MSME fraternity who take their Banker as friend, philosopher and guide in day to day operations.

Whether the wise counsel of SBI Chairman will reach Jaitley is the moot question. (KNN/ DB)