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CEA Urges MSME-Specific Review of NPA Classification Norms
India’s Chief Economic Advisor, V Anantha Nageswaran, says loan rules should better fit the way small businesses earn and spend money.
Small businesses can have different schedules for receiving payments and paying costs.
Today, a loan can be marked overdue in stages, and it generally becomes a bad loan after more than 90 days without a payment.
Nageswaran says even an earlier warning label can make life difficult for a business.
He wants the rules to reflect local business conditions instead of being the same everywhere in the world.
He also says small businesses need less paperwork and compliance costs.
He urged better worker training and greater use of trade agreements to help businesses grow.
He warned that microfinance lenders should avoid giving too many loans or selling products improperly.
He also said workers will need new skills as artificial intelligence becomes more common.
Chief Economic Advisor V Anantha Nageswaran urged the Reserve Bank to reconsider NPA classification norms for MSMEs.
He said rules should reflect Indian business practices and MSMEs’ varied cash-flow patterns rather than a uniform global framework.
Under current rules, loan accounts enter Special Mention Account categories at 30, 60 and 90 days overdue; loans generally become NPAs after more than 90 days overdue.
Nageswaran said SMA classification can already create serious difficulties for borrowers before they are formally classified as NPAs.
He also called for reducing compliance burdens, building skills, using trade agreements, and preventing over-lending and mis-selling in microfinance.
- Who
- Chief Economic Advisor V Anantha Nageswaran.
- What
- He called for MSME-specific NPA classification norms and outlined other priorities for MSME growth.
- Where
- The 21st National Conference of Inclusive Growth organised by Sa-Dhan; the article does not specify the location.
- When
- Friday; the article was published on October 9, 2026.
- Why
- He said MSMEs have varied working-capital needs and cash-flow cycles, and current classifications can burden borrowers before they are formally labelled NPAs.
Key facts
- Speaker
- Chief Economic Advisor V Anantha Nageswaran
- Event
- 21st National Conference of Inclusive Growth, organised by Sa-Dhan
- SMA overdue categories
- 30 days, 60 days and 90 days
- General NPA threshold
- Interest or principal overdue for more than 90 days
- MSME policy priorities
- Deregulation, skill development, trade-agreement use, and development models suited to different states
- Microfinance priorities
- Prioritise savings and insurance before credit; avoid over-lending and mis-selling
- Publication date
- October 9, 2026
Quotes
V Anantha Nageswaran
Chief Economic Advisor to the Government of India
“We need to evolve such norms consistent with our practices and cash flow patterns, rather than adopting a globally uniform pattern. These would be some of the things we need to do (for the MSME sector which is a big employment generator)”
thehindubusinessline.com
Sources
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