New Delhi: The economic downturn due to the ongoing covid pandemic over the past couple of years has hit the Micro, Small and Medium Enterprises (MSMEs) the most despite numerous programs and packages announced by the Reserve Bank of India (RBI) and the government . Thousands of MSMEs closed or fell ill after the government announced a strict nationwide lockdown in March 2020 as a result of Covid. According to the RBI, MSME bad loans now account for 9.6% of gross advances of Rs 17.33 lakh crore from 8.2% in September 2020.Also Read – RBI orders Paytm Payments Bank to immediately stop onboarding new customers. here’s why

According to a report in The Indian Express, Gross Non-Performing Assets (NPA) of MSMEs increased by Rs 20,000 crore to Rs 1,65,732 crore in September 2021 from Rs 1,45,673 crore in September 2020. As per the definition of the RBI, a micro unit investment should not exceed Rs one crore and turnover Rs 5 crore, small unit investment should not exceed Rs 10 crore and turnover Rs 50 crore and the investment of a medium enterprise should not exceed Rs 50 crore and turnover Rs 250 crore. Also Read – Sensex Could Hit 75,000 By Dec 2022: Report

For the uninitiated, a loan becomes a non-performing asset when either principal or interest is past due after 90 days. Also read – Now make UPI payments without internet or smartphone. here’s how

Among state-owned banks, PNB had NPAs for MSMEs of Rs 25,893 crore in September 2021, followed by State Bank of India of Rs 24,394 crore, Union Bank of Rs 22,297 crore and Canara Bank of Rs 15,299 crore, according to the RBI.

The publication’s report further states that the increase in bad loans occurred even after the RBI announced four loan restructuring programs for MSMEs in January 2019, February 2020, August 2020 and May 2021. 1, 16,332 crore was restructured under these schemes. Under the May 2021 circular issued by the RBI, loans of Rs 51,467 crore have been restructured,” according to the RBI’s “Trend and progress of banking” report.

Program introduced by the government, RBI for the revival of MSMEs

To revive MSME business, the RBI and the government had earlier introduced several measures including the Emergency Line of Credit Guarantee Scheme (ECLGS), which offered Rs 3 lakh crore in unsecured loans to MSMEs and companies.

Under the ECLGS, loans amounting to Rs 2.82 lakh crore have been sanctioned till November 12, 2021, of which Rs 2.28 lakh crore has been disbursed (Rs 1.94 lakh crore by commercial banks, representing 20.6% of additional credit during the period).

The RBI also extended the one-time MSME loan restructuring program without downgrading of asset classification and allowed bank loans to NBFCs (other than MFIs) for on-lending to agriculture, MSMEs and housing to be downgraded. as Priority Sector Loans (PSL ).