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MSME bodies urge RBI for SMA-2 stressed loan accounts
Context:
MSME bodies urged Reserve Bank of India (RBI) to extend the threshold period for stress loan accounts under the special mention account-2 (SMA-2) category to 180 days from 90 days currently.
Key Requests from MSME Bodies to RBI
- Extend SMA-2 Threshold Period: Current SMA classification triggers penal actions even for minor delays (SMA-0), impacting credit score (SMA-1), and restricting credit access (SMA-2).
- This rigidity disregards genuine reasons for delays, such as late payments from buyers.
- Review Definition of Wilful Defaulter: Federation of Indian Micro and Small & Medium Enterprises Industry (FISME) urged RBI to review the broad definition of wilful defaulter.
- It proposed a more nuanced approach, considering factors like current ratios and past loan renewals.
- Ease Credit Norms for Export-oriented MSMEs: Industry association advocates easing credit norms for export-oriented MSMEs, suggesting Letters of Credit as adequate security for additional credit.
- Develop Targeted Solutions: A revised SMA framework with extended timelines, SOPs for bank intervention, and a more pragmatic definition of ‘willful defaulter’ is crucial to support MSMEs.
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Special Mention Accounts (SMAs)
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