Nageswaran Seeks MSME-Focused NPA Rules, Flags One-Size-Fits-All Approach
What Happened
Nageswaran, India's Chief Economic Advisor, called for a review of NPA classification norms for MSMEs, arguing that current rules do not adequately reflect the diverse working capital needs and cash flow cycles of small businesses. He said lending norms should be aligned with Indian business realities rather than a globally uniform framework.
Key Takeaways
The CEA warned that even classification as a Special Mention Account (SMA) can hurt MSMEs' access to credit before they officially become NPAs, making a strong case for sector-specific lending norms and credit assessment standards.