Our first advice to MSMEs is “DONT PAY BANK, Till we meet” That means you have to stop payments towards loan obligations. Do not pay by borrowing from external sources just to avoid NPA tag or to delay further recovery action. Once you are under stress / NPA you have to think only about two things. One is to take the legal protection to safeguard the valuable mortgaged assets and second is to revive the business. Your business is the only solution to all your problems including banking and NPA.
My advice to MSMEs is that “Don't look at the business from the banker's point of view. Look at the bank from the business point of view”.
“Who is for whom? Bank is for business or business is for the bank?” In my opinion, bank is for the business.
Our lawmakers, our policy makers, the bodies like RBI, have designed the entire debt recovery process of Non Performing Assets of Bank and NPA related laws based on two assumptions that bankers are not wrong and the promoters are cheats.
But is it true? It is not always true. In most of the cases if the business is revived, perhaps Banks will recover more than what they otherwise recover through sale of assets. The emphasis should be on revival of business and not killing business. So therefore, my suggestion in a pre and post NPA situation is that safeguard assets, gain time legally, stop paying bank, focus on reviving the business, gain strength and then settle the bank in a business-like manner or every penny including principal amount plus interest due to the Bank.