The Union government is contemplating an extension of the non-performing assets (NPA) classification period for loans to micro, small, and medium enterprises (MSMEs) from the current 90 days to 180 days in the forthcoming FY25 Budget, according to a senior government official.
"To provide support and relaxation to MSMEs, the government may extend the NPA period. Currently, the NPA period is 90 days, but it may be increased to 180 days. This may be included in the Budget," said the senior government official.
MSMEs are crucial to job creation in India, contributing around 29 per cent to the country's gross value added and approximately 45 per cent to its exports. However, they often face challenges in receiving timely payments, leading to loan repayment defaults.
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