Low bargaining power of the entities hitting MSMEs badly: Expert panel

Data shows that apart from commercial banks, NBFCs emerged as a big funding source for the sector

The expert committee on MSME was concerned about the low bargaining power of the entities and their aversion to take legal recourse against powerful debtors. Ideally what should be a 90-day credit period could stretch to 280 days, which adversely affected the working capital cycle of these firms too.
 
Ironically, debtors include not only corporates, but government-owned firms, and agencies of both the Centre and states.
 
In the absence of empirical data, the committee computed average debtor days from FY98 to FY18, based on the CMIE data, taking into account 15,000-20,000 companies each year, of which the smallest