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MSME Sector Reports Growth with Significant Decline in Non-Performing Assets.

Economy Business | Dated: 17 Mar 2025

On 11th March 2025, the Ministry of Finance (MoF) announced that over the past five years, the Micro, Small, and Medium Enterprises (MSME) sector has witnessed a steady rise in total advances. Simultaneously, the sector has experienced a continuous decline in Non-Performing Assets (NPAs) and the Gross NPA ratio.

🎯 Key Highlights:

  • - According to provisional data for Financial Year (FY) 2025, up to December 31, 2024, both Gross NPAs and the Gross NPA ratio have shown a decline. This indicates an improvement in financial stability within the MSME sector.
  • - As of March 31, 2020, the total advances outstanding to the MSME sector stood at Rs.16.98 lakh crore. By March 31, 2024, this amount increased to Rs.28.04 lakh crore, reflecting a significant rise in financial support for MSMEs.
  • - The Gross NPAs of the MSME sector decreased from Rs.1.87 lakh crore (11% of total advances) in FY 2020 to Rs.1.25 lakh crore (4% of total advances) in FY 2024. This represents a substantial reduction in the sector's NPA burden.

💡 Other Important Facts:

  • (i) To strengthen MSMEs, the Government of India (GoI) introduced the Framework for Revival and Rehabilitation via Gazette Notification S.O. 1432(E) on 29th May 2015. This framework provided a structured mechanism to resolve stressed MSME accounts.
  • (ii) The Prudential Framework for Stressed Assets (2019) was introduced to ensure early recognition and time-bound resolution of NPAs. Additionally, the Pre-Packaged Insolvency Resolution Process (PPIRP) under the Insolvency and Bankruptcy Code (IBC) was implemented for quicker and cost-effective MSME debt resolution.
  • (iii) Several relief measures, including COVID-19 loan moratoriums, revised working capital norms, and resolution frameworks (1.0 & 2.0), were introduced to ease financial stress. Additionally, the Union Budget 2024-25 announced a new mechanism to ensure an uninterrupted credit flow to stressed MSMEs, further strengthening the sector's financial health.

📚 Test Your Knowledge:

Which sector has recently reported growth along with a significant decline in Non-Performing Assets (NPAs)?

Correct Answer: MSME Sector

🚀 Quick Recap: