In a potential policy shift, the Indian government is contemplating extending 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. This adjustment aims to alleviate financial pressure on MSMEs, pivotal in India’s economy and job creation, contributing around 29% to the country’s GDP. By doubling the NPA period, the government seeks to enhance MSMEs’ ability to manage cash flows and navigate economic uncertainties more effectively.
Potential Budget Measure: Extended NPA Classification Period for MSME Loans
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