In recent years, the small scale (SME) units have been put to cruelty and
grave hardship because of the introduction of scheme of classifying
accounts into non performing assets (NPA). In 1997, NPAs of micro,
small, medium, large industries put together stood at 15.8 percent of
bank loans. In the same year, while the SSI sector was responsible for
nearly one-half of the total number of NPA accounts, its share in the
absolute amount of NPA accounts was about 20 percent. Thereafter, the
proportion of NPA accounts started to decline due to the introduction of
very stringent norms. It declined to 10.7 percent 1999-2000 and
thereafter it showed a continuous decline and stood at to 2.4 percent in
2008-09. But recently there has been an enormous increase in the
number and volume of NPA accounts. The NPAs of the Indian banking sector
increased to 2.40 percent in 2010-11 and increased further to . 2.94
in 20011-12. In absolute figures NPAs have almost doubled during
2009-2012, i.e. it increased from about Rs.56,300 crore in March 2008
to about Rs.117,262 crore in March 2012. And assets under reconstruction
had trebled during the same period. But for the restructuring of
corporate sector bad loans amounting to Rs.2.0 lakh crore in the last
two years the banking sector would have witnessed an enormous surge in
the volume of NPA. According to figures provided by RBI many corporates
have gone for second restructuring, which shows that the situation is
becoming more serious.
Experts feel that applying certain common norms to classify the
accounts as NPA for all categories of industries, viz. large, medium,
small, and micro units, is illogical and unreasonable. To treat a micro
industrial/business unit together with large scale units is sheer
imprudence and ramification of neo-liberalism. The current practice of
classifying industrial units as “non- performing,” if interest or
installments of principal due remain unpaid for more than 90 days has
caused grave hardship and untold sufferings to the small scale
entrepreneurs across the country. So they have been clamoring for
relaxation of norms for NPAs and extension of time limit for repayment
of loans from the present 90 days to at least 180 days, following the
ongoing global recession.5It has resulted in more and more SME units
becoming sick and ultimately NPA in the absence of proper rehabilitation
or restructuring of the SSI as in the case of the corporate sector. As a
result, the SME units all over the country are in a fix, anticipating
closure of their units any time either by themselves or by the
banks.Reports show that sometimes the bank officers harass the borrowers
even for flimsy and unorthodox reasons.