The big problem of micro and small enterprises

Under pressure, many banks are in perennial search of Mudra loan seekers. In the process, the credit risks are rising

A few months ago, the NBFCs (non-banking finance companies) were the flavour the season. Now the MSMEs (micro, small and medium enterprises) are. Both, for the wrong reasons.

The NBFC sector stole the limelight when many started staring at stark asset-liability mismatches as a result of their greed for growth, mispricing the risks. A sudden rise in the short-term rates caught them unawares. The MSMEs are credit-starved and many of them are not able to service their loans as their businesses have gone for a toss.

More than banks, the NBFCs were meeting MSMEs’ credit needs but they are being