Chief Economic Adviser pushes for tailored NPA norms for MSMEs

The Chief Economic Adviser has advocated for a specialized approach to non-performing asset (NPA) classification norms that would account for the distinct characteristics of micro, small and medium enterprises.

The CEA noted that MSMEs operate with varying working-capital requirements and differing cash-flow cycles compared to larger corporations, suggesting these differences warrant a review of existing NPA classification standards.

The Finance Ministry has signalled policy-level backing for reconsidering the current norms. Officials acknowledged that a one-size-fits-all approach to NPA classification may not adequately reflect the operational realities of the MSME sector, which forms a significant part of India's economy.