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CEA Urges MSME-Specific NPA Classification Norms to Protect Small Businesses
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News18•09-10-2026, 14:15
CEA Urges MSME-Specific NPA Classification Norms to Protect Small Businesses
- •Chief Economic Advisor V Anantha Nageswaran advocated for revisiting non-performing asset classification norms for MSMEs to better reflect domestic business practices and cash flow cycles.
- •He noted that the current transition to Special Mention Account status creates severe operational difficulties for borrowers even before accounts are formally classified as NPAs.
- •Nageswaran emphasized the need to reduce compliance burdens and deregulation for MSMEs to help them focus on business growth and employment generation.
- •He highlighted the upcoming trade agreements with the UK and the European Union as major opportunities for Indian goods and services to reach global markets.
- •The CEA also cautioned microfinance institutions against over-lending and mis-selling, stressing that priority should be given to savings and insurance before credit.
Key Questions Answered
Chief Economic Advisor V Anantha Nageswaran proposed revisiting non-performing asset classification norms for MSMEs so they reflect domestic business practices and cash flow patterns rather than a globally uniform framework.
The transition to Special Mention Account classification can have significant consequences, with businesses facing difficulties and becoming de facto troubled even before their accounts are formally classified as NPAs.
The CEA stated that microfinance institutions must avoid over-lending and mis-selling, prioritizing savings and insurance before credit. He also emphasized upskilling workers to address the challenges and strengths tied to artificial intelligence and labour-intensive growth.
