Banks not to declare stressed assets of MSMEs as NPAs until March 31, 2020

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After meeting with the heads of public sector banks(PSB) to discuss various issues, including follow up on transmission of monetary policy rates, Finance Minister Nirmala Sitharaman stated that in order to overcome the slowdown in the economy and increase business activities, the government asked banks not to declare stressed loans of Micro, Small and Medium Enterprises (MSMEs) as Non Performing Assets (NPAs) until March 31, 2020.

  • Banks will also hold an open meeting with NBFCs (Non-Banking Financial Companies) and retail borrowers in 200 districts before September 29, 2019 with the intention of giving loans to farmers, retail loan creditors ,loans for housing, vehicles and other purposes.In the second phase, such meetings will be held in 200 other districts from October 10 – October 15, 2019. That is, there will be meetings of this kind in 400 districts in total.
  • On September 5, 2019,  Reserve Bank of India(RBI) has asked banks to link all new types of floating-rate loans (home, auto loans & and micro, small and medium enterprises (MSME)) to external benchmark like repo rate from October 1, 2019 for the welfare of the consumers.
  • Stressed assets : NPAs + Restructured loans + Written off assets.NPAs means a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. The assets of the loan which got an extended repayment period, reduced interest rate, converting a part of the loan into equity, providing additional financing, or some combination of these measures.