SC Ruling: Banks, NBFCs Must Follow 2015 Framework for MSME Loan NPAs

The Supreme Court has ruled that banks and NBFCs must follow the 2015 Framework before classifying MSME loans as NPAs (Non-Performing Assets). This decision ensures that MSMEs are not prematurely classified as NPAs and helps protect small businesses from undue financial stress. The 2015 framework requires banks to identify "incipient stress" in MSME accounts and follow specific guidelines before declaring them NPAs. This ruling strengthens the growth prospects of MSMEs and promotes fair practices in managing financial difficulties.

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