A Frequency Assessment of Prevalent Prevention Strategies in order to Manage Banks’ NPAs in MSME Loans

Abstract

The vast amount of non-performing assets (NPAs) is a recurrent problem and a huge barrier to developing a successful banking sector. The MSME sector of the Indian economy is experiencing a worsening problem with delinquent assets. There has hardly been any systematic evaluation of tackling the problem in the context of loans sanctioned to MSMEs. Recent years have seen an increase in bad loans to micro, small, and medium businesses. Curative and preventive measures are both available to control non-performing assets (Meher et al., 2020). The study makes an effort to concentrate on the identification of numerous preventive methods for NPA management in the MSME sector in future. The primary data is related to the actual usage of preventive measures. The data was empirically evaluated using frequency analysis based on a survey of 316 bankers from 10 banks (5 from public and 5 from private sector). Therefore, the current study aims to shed light on the methods utilised to prevent NPAs in MMSEs while taking into account the viewpoint of the bankers who have had direct involvement in lending choices. The findings highlight the key methods for preventing NPAs which the banks must consider while making the necessary structural modifications to their mitigation measures.

Credit Financial Systems for the Small Enterprises in India

“…The findings underscore key preventive measures that banks should consider while structurally modifying their mitigation strategies. [5] Tara Nair (2019), A thorough examination of the credit flow data to the micro and small enterprise sector in India since the 1970s reveals that the strategic shift in industrial policy during the mid-2000s, creating a distinct category known as micro, small, and medium enterprises, has not yielded any tangible benefits in terms of improving access to institutional credit for MSEs'. Furthermore, it is evident that the promarket financial inclusion rhetoric prevalent in the latter half of the current decade has not proven advantageous for MSMEs, particularly those involved in manufacturing activities, when it comes to securing bank credit.…”