Banks Cautious with MSME Loans Amid NPA Rule Concerns

26 Jul 2024 CW Team

Banks are increasingly cautious about lending to micro, small, and medium enterprises (MSMEs) due to stringent non-performing asset (NPA) classification rules. This hesitancy arises from concerns about the potential risk of loans turning into NPAs, impacting banks' financial health.

The Reserve Bank of India's (RBI) regulations on NPA classifications require banks to recognize stressed assets promptly. This has led to a conservative approach towards lending to MSMEs, which often face cash flow challenges and delayed payments from larger clients. Consequently, banks are wary of extending credit to these businesses, fearing that defaults might negatively affect their balance sheets.

Despite the crucial role MSMEs play in the economy, providing employment to millions and contributing significantly to GDP, they often struggle to secure financing. The current cautious stance of banks could hamper the growth and recovery prospects of these enterprises, especially post-pandemic.

Industry experts emphasise the need for a balanced approach, suggesting that banks should not shy away from lending to MSMEs but instead focus on innovative solutions to mitigate risks. Recommendations include customised financial products, better assessment of creditworthiness, and leveraging technology for improved credit monitoring.

To address the challenges faced by MSMEs, policymakers are urged to review and adjust the NPA classification framework, creating a more supportive environment for lending. Ensuring access to finance for MSMEs is essential for sustaining economic growth and fostering entrepreneurship across the country.

Infrastructure Energy

23 Oct 2025

GAIL to Set Up Bengaluru CBG Plant Under New Concession Pact

GAIL (India) Limited has signed a 20-year concession agreement with the Bengaluru City Municipal Corporation (BBMP) to set up a compressed biogas (CBG) plant in the city. The project, expected to produce around 10 tonnes of CBG daily, will utilise municipal solid waste as feedstock, contributing to clean energy generation and efficient waste management. The CBG produced will be used in GAIL’s City Gas Distribution network to promote cleaner fuel usage. The initiative aligns with the government’s Sustainable Alternative Towards Affordable Transportation (SATAT) scheme and GAIL’s broader ..

Uttarakhand HC Lifts 31-Year Ban on ONGC’s Contractual Hiring

The Uttarakhand High Court has lifted a 31-year-old ban on the Oil and Natural Gas Corporation (ONGC) from hiring contractual workers, a restriction imposed in 1993. The decision enables ONGC’s Dehradun establishment to employ personnel on a contractual basis to meet operational requirements. The long-standing prohibition had limited ONGC’s ability to fill vacancies in its technical and administrative departments, often leading to project delays and higher dependence on outsourcing. With the court’s directive, the public sector enterprise can now proceed with temporary recruitments whil..

JSW Energy’s Utkal Unit Bags 400 MW, 25-Year Power Supply Deal

JSW Energy Limited announced that its subsidiary, JSW Energy (Utkal) Limited, has secured a Letter of Award (LoA) from Karnataka’s Power Company of Karnataka Limited (PCKL) for the supply of 400 MW of electricity for 25 years. The agreement is part of a competitive bidding process for long-term procurement of power to meet the state’s growing energy demand. The 400 MW capacity will be supplied from JSW Energy’s upcoming thermal power project in Odisha. This development strengthens JSW Energy’s presence in the southern market and aligns with its strategy to enhance long-term contracte..