CAUSES FOR NPA IN MSMEs AND AGRICULTURE SECTOR

Abstract

1.1 Background MSMEs and Agriculture sectors are crucial sectors in terms of employment as well as to maintain economic regional balance in the country. For past several years, these sectors have been indulging in downturn in their working operations, specially, increasing NPAs in the sectors. Increasing NPAs in these sectors are also restricting the revenue of the involved banks in the process of Loan. There are multiple reasons for which the obligators defaulted on their obligations. These reasons vary from unfavourable economic conditions to unfavourable weather conditions. Non performing assets (NPA) occurs when the borrower defaults on obligation for more than 90 days. The Gross NPA in PSBs accounted for INR 9.42 lakh crore by the end of the July, out of which INR 1.1 lakh crore belonged to agriculture and its allied activities. Likewise, MSME loans worth of INR 2.4 lakh crore have been disbursed by banks by January 2020, out of which 12.1% stood as NPA by December 2019. 1.2 Objectives of the Study  To obtain potential causes in MSME and Agriculture sectors  To understand the impact of NPAs in banks and economy as a whole  To gather participants’ view on NPA in the designated sectors 1.3 Scope of the Study The significance of the project is to procure causes of NPA to make amendments in the process to tackle and reduce the threats of NPAs and to manage NPA in the best possible way. The suggestions acquired from the participants’ input play a key role to find loopholes and to make intuitive decisions to contain NPA.