RBI statistics
show that stressed assets in Indian banking have reached the alarming level of
16% of the total assets. MSMEs, however, suffering a cascading effect of their
elder brothers in corporates as vendors, are at the fringe, with around 8%. The
extent of ‘wilful default’ as defined by RBI and the contribution of ‘financial
illiteracy’ of MSMEs cannot be established by data. Hidden or undisclosed
reasons for NPAs in banks’ books have been narrated in a few research studies
that include CII, FICCI, ASSOCHAM, CAB, etc, but they had no institutional
solutions.
Karimnagar district in Telangana has thrown up a few cases. An entrepreneur
manufacturing unbranded detergent who received all accolades from the
government found himself on the decks due to his market restricted only to the
state government during 2008-14. Another from the same place, engaged in
manufacturing and innovative recycling of batteries for automobiles with market
restricted to the state public transport undertaking that actually saved no
less than Rs 35 lakh per month to the entity, became an NPA and sold off his
property to settle debt under the OTS. A third entrepreneur, engaged in
manufacturing paints at Jeedimetla IE in Hyderabad, similarly suffered in
strategically positioning himself in the market.
