Saving MSMEs

• Over past few years,MSME sector is facing series of shocks.

Reasons

• Transition to goods and services tax (GST)
• Effects of pandemic - disruption in economic activities

Financial stability report

• Gross NPA of MSME sector have dropped recently
• Remained high in march 2022
• Bad loans in MSME sector stood at 93%.
• Restructured MSME loans, around 2.5% of total advances, is a source of concem.

Way forward

• Signs of turnaround as bank credit to MSMEs has picked up.
• With Government's relief measures largely through formal banking, formal MSME has recovered faster.