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 Urban

02 Jun 2026

VECV Sales Rise 7.8 Per Cent In May 2026

VE Commercial Vehicles recorded sales of 7,978 units in May 2026, compared to 7,401 units in May 2025, registering growth of 7.8 per cent. This included 7,789 units from the Eicher brand and 189 units from the Volvo brand.Eicher branded trucks and buses reported sales of 7,789 units during the month, up 7.3 per cent from 7,258 units a year earlier. In the domestic commercial vehicle market, Eicher sales rose 9.1 per cent to 7,375 units from 6,758 units in May 2025.Exports declined 17.2 per cent to 414 units from 500 units in the corresponding month last year. Volvo Trucks and Volvo Buses recor..

Table Space Strengthens DESYN Leadership Team

Table Space has announced strategic leadership appointments within DESYN, its integrated Design and Build business, as it looks to strengthen operations across key enterprise and GCC markets in India. DESYN was launched as a strategic extension of Table Space’s workspace solutions portfolio to meet rising demand for agile, high-quality and rapidly deployable enterprise workspaces.Shruti Ookabhoy has joined DESYN as Executive Director and will lead the Design vertical, focusing on design capability, operational excellence and team development across markets. She brings over 22 years of experi..

Concord Associate Bags Rs 2.79 Bn Kavach Order

Concord Control Systems said its associate company, Progota India, has received a Rs 2.79 bn domestic order from Indian Railways for the supply, installation, testing and commissioning of on-board Kavach 4.0 loco equipment.The order is scheduled for execution within 12 months and strengthens Concord’s role in India’s railway safety and signalling ecosystem. Kavach is India’s indigenous automatic train protection system, designed to improve operational safety by helping prevent signal passing at danger and reducing collision risks.Gaurav Lath, Joint Managing Director, Concord Control Syst..