Financial advisory services provider Resurgent India, has requested the government to extend non-performing asset (NPA) recognition norms for MSMEs to 180 days from the current three months period as they have been facing difficult time.

The micro, small and medium enterprises (MSMEs) have had a testing time in the past few years, especially with respect to bank loans and NPAs hitting expansion and growth of the sector, Resurgent India said in a statement.

“The big suppliers take longer time for payment and with the rollout of GST, MSME companies can claim the input credit only after the supplier has made payment. This will lead to blocking of 15-17 per cent of the capital of MSME companies, slipping them into NPA category,” Resurgent India MD Jyoti Prakash Gadia said.

Therefore, extending of the NPA recognition norms to 180 days can be a game changer for the MSMEs in India as it will consequently reduce the NPA by almost 50 per cent, he said.

Currently, MSME sector works on a profit margin of 5-7 per cent.

Source: india.com