In the last two years, the hit to the economy in the wake of the Corona epidemic has affected the Micro, Small and Medium Enterprises (MSMEs) the most. This has happened despite the announcement of loan restructuring and package by the Reserve Bank of India (RBI) and the government. In an RTI reply filed by The Indian Express, RBI said the gross non-performing assets (NPAs) of MSMEs, or defaulted loans of these enterprises, rose by Rs 20,000 crore to Rs 1,65,732 crore as of September 2021. In September 2020, this figure was Rs 1,45,673 crore.
According to RBI, MSMEs’ bad loans now account for 9.6 per cent of gross advances of Rs 17.33 lakh crore as against 8.2 per cent in September 2020. In September 2019, the bad loans of MSMEs declined by Rs 1,47,260 crore (8.8 per cent of the advance). RBI says public sector banks account for a major chunk of Rs 1,37,087 crore in MSME NPAs. Talking about public sector banks, PNB had MSME NPAs of Rs 25,893 crore as of September 2021. This was followed by State Bank of India at Rs 24,394 crore, Union Bank at Rs 22,297 crore and Canara Bank at Rs 15,299 crore.
The loan converts into a non-performing asset when the principal or interest becomes overdue after 90 days. RBI announced the loan restructuring scheme for MSMEs four times in January 2019, February 2020, August 2020 and May 2021. Even after this, there was an increase in bad loans. Under these schemes, 24.51 lakh MSME accounts worth Rs 1,16,332 crore were restructured. According to the RBI’s ‘Trends and Progress of Banking’ report, in May 2021, loans worth Rs 51,467 crore were restructured under the circular issued by the RBI.
According to RBI, the investment of a micro unit should not exceed Rs 1 crore and the turnover should not exceed Rs 5 crore. The investment of small units should not exceed Rs 10 crore and the turnover should not exceed Rs 50 crore. The medium enterprise has an investment of Rs 50 crore and a turnover of Rs 250 crore. should not be more than