Archive · 9 Oct 2026
CEA urges review of overdue-loan rules for MSMEs
V. Anantha Nageswaran says loan rules should better fit the way small businesses earn and spend money.
Different businesses may take different amounts of time to receive payment.
Under current rules, banks label late payments in stages, and loans unpaid for more than 90 days become non-performing assets.
Nageswaran said an early warning label can make it harder for a small business to get more credit.
He also said microfinance groups should focus on savings and insurance before lending more.
A report showed that overdue-risk measures in microfinance improved by March 2026.
He also said states should choose different ways to grow, rather than follow one model.
For example, some could focus on factories and investment, while others could create more jobs through labour-intensive growth.
Chief Economic Adviser V. Anantha Nageswaran called for reviewing overdue-loan rules for MSMEs to reflect their differing cash-flow cycles.
He said being classified as a Special Mention Account can effectively cut off an MSME’s access to further credit.
Banks classify overdue accounts as SMA-0 up to 30 days, SMA-1 at 31–60 days and SMA-2 at 61–90 days; more than 90 days overdue is an NPA.
Nageswaran urged microfinance entities to prioritise savings and insurance before credit and avoid overleveraging.
Sa-Dhan’s report showed microfinance portfolio at risk of 30–179 days fell to 2.34% in March 2026 from 6.63% a year earlier.
- Who
- Chief Economic Adviser V. Anantha Nageswaran; the remarks also addressed MSMEs, banks and microfinance entities.
- What
- He urged a review of overdue-loan rules for MSMEs and called for tailored state growth strategies.
- When
- Friday; the report cited data through March 2026.
- Where
- At a Sa-Dhan-organised event in New Delhi.
- Why
- To align loan rules with MSMEs’ differing cash-flow cycles and address concerns that early overdue classifications can restrict access to credit.
- Speaker
- Chief Economic Adviser V. Anantha Nageswaran
- Event
- An event organised by Sa-Dhan in New Delhi
- SMA-0
- Payments delayed by up to 30 days
- SMA-1
- Payments delayed by 31 to 60 days
- SMA-2
- Payments delayed by 61 to 90 days
- NPA threshold
- More than 90 days overdue
- Microfinance PAR, 30–179 days
- 2.34% in March 2026, down from 6.63% a year earlier
- Microfinance PAR, 90–179 days
- 1.45% in March 2026, down from 3.92% a year earlier