Lok Sabha Question No. 6266 (UNSTARRED), answered on 2026-04-02
Subject: Implementation of Statutory Revival Framework for MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Adv K. Francis George

## GOVERNMENT OF INDIA

## MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 6266 TO BE ANSWERED ON: 02.04.2026

## IMPLEMENTATION OF STATUTORY REVIVAL FRAMEWORK FOR MSMEs

6266.     ADV K. FRANCIS GEORGE:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) whether  the  Government  is  aware  of  the  problems  faced  by  Micro,  Small  and  Medium Enterprises (MSMEs) including credit constraints, delayed payments and complaints of harassment by banks  through  indiscriminate  invocation  of  the  Securitisation  and  Reconstruction  of  Financial  Assets and  Enforcement  of  Security  Interest  Act,  2002  (SARFAESI)  and  if  so,  the  details  thereof  and  the number of such complaints received during the last five years, State-wise;
- (b) whether  banks  and  financial  institutions  are  constituting  Committees  for  identification  of incipient stress, classifying SMA-0, SMA-1 and SMA-2 accounts and preparing Corrective Action Plans as mandated under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) and the Reserve Bank of India (RBI) Notification dated 29.05.2015 and if not, the reasons therefor;
- (c) whether MSME  accounts are being classified as Non-Performing Assets (NPAs) and recovery  proceedings  initiated  without  first  implementing  statutory  revival  measures  and  if  so,  the details thereof; and
- (d) whether the Government proposes to take regulatory or supervisory action to ensure compliance and if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SUSHRI SHOBHA KARANDLAJE)

- (a): Government of India has, inter-alia, taken various steps to address the problems faced including credit  constraints,  delayed  payments  and  complaints  of  harassment  by  banks  for  Micro,  Small  and Medium Enterprises (MSMEs) across the country:
- I. Credit  Guarantee  Scheme  (CGS)  for  Micro  and  Small  Enterprises  (MSEs)  implemented through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to provide credit  guarantee  for  loans  extended  to  MSEs  without  collateral  security  and  third-party guarantee, up to guarantee coverage of Rs. 10 crore.

- II. Self-Reliant India (SRI) Fund has been set up to infuse Rs. 50,000 crore as equity funding in MSMEs with a provision of Rs. 10,000 crore from Government and Rs. 40,000 crore through Private Equity/Venture Capital Funds. The Budget 2026-27 has also announced a support of Rs 2,000 crore to top up the SRI Fund set up in 2021 to bolster support to micro enterprises.
- III. Prime Minister's Employment Generation Programme provides Margin Money subsidy up to 35%,  for  setting up  of  new  micro  enterprises,  with  project cost of Rs. 50  lakh  for manufacturing and Rs. 20 lakh for services enterprises.
- IV. PM Vishwakarma Scheme was launched on 17.09.2023 to provide holistic support to artisans and craftspeople of 18 specified trades. The Scheme includes provision of collateral free loans up to Rs. 3 lakh with interest subvention up to 8%
- V. In  terms  of  para  4.1  (a)  of  RBI  Master  Direction  -  Lending  to  Micro,  Small  &  Medium Enterprises  (MSME)  Sector  dated  July  24,  2017,  all  Scheduled  Commercial  Banks  are mandated not to accept collateral security in the case of loans up to Rs.10 lakh extended to units  in  the  MSE  sector.  As  per  RBI  circular  dated  9th  February  2026,  this  limit  stands increased to Rs. 20 lakh from 1 st April, 2026.
- VI. Government regularly organizes outreach programmes in coordination with MSME/ Industry Departments of States/UTs concerned and other  stakeholders like CGTMSE, SIDBI,  Banks, MSME Associations etc., to enhance credit availability among MSMEs.
- VII. The liquidity issues of MSMEshave been dealt with MSME SAMADHAN portal and the cases are decided by Micro and Small Enterprises Facilitation Councils (MSEFCs). Government also launched  Online  Dispute  Resolution  (ODR)  portal  on  27.06.2025  as  digital,  technologyenabled mechanism to strengthen SAMADHAN portal, with the objective of ensuring timely, affordable, and transparent resolution of delayed payment disputes.
- VIII. To  address  the  working  capital  issues,  Government  vide  notification  S.  O.  4845(E)  dated 07.11.2024 directed CPSEs and all companies with the turnover of Rs.250 Crore or more to on-board  the  Trade  Receivables  Discounting  System  (TReDS),  an  electronic  platform  for facilitating the discounting of trade receivables of MSMEs through multiple financers.
- IX. To  unlock  the  potential  of  working  capital  of  MSMEs  through  TReDS,  platforms,  the following four key measures have been announced in Budget Announcements 2026-27:
- i. Mandate  TReDS  as  the  settlement  platform  for  purchases  from  MSMEs  by  CPSEs, setting a benchmark for other Corporate.
- ii. Introduce CGTMSE-backed credit guarantee support for invoice discounting on TReDS platform.

- iii. Integrate  with  GeM  with  TReDS  to  enable  information-sharing  with  financers  on Government MSME purchases, facilitating faster and cheaper credit.
- iv. Introduce receivables as asset-backed securities to deepen the secondary market, improve liquidity, and speed up settlements.
3. (b) & (c): As informed by Reserve Bank of India (RBI), the Circular on Framework for Revival and Rehabilitation (FRR) of MSMEs was revised advising banks to identify incipient stress in the account and classify it under the Special Mention Account (SMA) as under:

| SMA sub- categories   | Basis for classification                                                                                      |
|-----------------------|---------------------------------------------------------------------------------------------------------------|
| SMA-0                 | Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress |
| SMA-1                 | Principal or interest payment overdue between 31-60 days                                                      |
| SMA-2                 | Principal or interest payment overdue between 61-90 days                                                      |

The branch maintaining the accountsforwards the stressed accounts, with aggregate loan limits above Rs. 10 lakh, to a committee for a suitable Corrective Action Plan (CAP). The resolutions under CAP may include rectification, restructuring and recovery.Any MSME borrower may voluntarily initiate proceedings  under  this  Framework,  if  the  enterprise  reasonably  apprehends  failure.The  FRR  only requires an MSME account classified as SMA-2 to be mandatorily referred to the Committee. It neither mandates  restructuring  as  the  corrective  action  plan  nor  preclude  the  Regulated  Entities  (REs)  from classifying the account as NPA based on the record of recovery.

- (d): As informed by RBI, to  monitor  the  progress  in  implementation  of  the  above  circular  by  the banks, all Scheduled Commercial Banks have been advised to submit a half yearly statement (September and  March)  on  various  parameters  envisaged  in  the  circular.  Such  statements  are  collected  from  the banks on regular basis.

****