Overview
- Chief Economic Advisor V Anantha Nageswaran made the appeal Friday at the 21st National Conference of Inclusive Growth organised by Sa‑Dhan, saying current rules do not reflect India‑specific business cycles.
- Under current practice banks tag overdue accounts as Special Mention Accounts in 30/60/90‑day buckets and declare non‑performing assets after 90 days, a process the CEA warned can restrict borrowing before formal NPA status.
- The Finance Ministry has pressed for a review because MSME sectors have very different working‑capital and payment cycles that a uniform timeline can misread.
- Nageswaran also urged simpler rules and deregulation to cut compliance costs for small firms, cautioned microfinance lenders against over‑lending, and stressed worker upskilling as AI changes jobs.
- Any change would require formal action by the Reserve Bank and coordination across ministries, with the immediate policy test being whether regulators revise classification or rely on other measures to protect MSME credit and jobs.