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How NPA Consultants helps MSMES to turn around debt crisis

Posted Date: 17-02-2021 Posted By: user

MSME or Micro Small and Medium Enterprises constitute a major part of the economy of India. The majority of businesses fall under this category with an estimated share of 8 percent. The sector gives more than 110 million employments and two and a half million jobs every year. The growth of MSME is vital for the economy.

It is quite obvious that npa in india is also contributed by the MSME sector the most. More MSMEs are facing the problem of the inability of paying their loans. In the most unfortunate scenario, they have to forfeit their businesses. Indeed, the banks have their limitations. They cannot afford to leave the defaulters as it is against the larger interest of the bank. However, it is essential to look into the matter from the larger perspective.

There is no need for hurriedly declaring the borrower as Non-Performing Asset or NPA and liquifying its assets. It will yield only 30 to 40 percent of the borrowed amount. Instead, the banks should work on a solution that will benefit the borrower, the bank, and the economy. It should be a win-win solution for all.

The npa debt settlement is one of the steps taken by the government to control the NPA situation.

Role of NPA consultant

When the macro, medium, or small enterprises default on their loans borrowed by banks, they have to face different consequences. Instead of deciding on the course of action on their own, enterprises should hire NPA consultants. They can assist the MSME to achieve a turnaround from the crisis with their npa services. The consultants can guide on the methods and ways to counter the situation.

What are the strategies obtained by the NPA consultant? These strategies are well within the periphery of the laws and regulations. They give a new life to the defaulters by restructuring the business. As per the definition of NPA, any organization that has defaulted the loan repayment for more than 90 days is called NPA. Banks or financial agencies can initiate the process of selling the mortgaged assets after the 90 day period.

There is an adverse impact of this. In an attempt to recover its money, the bank hampers the operations of the MSME. They paralyze the activities and put the MSME out of business sometimes. Entrepreneurs find themselves in a soup and remain at the mercy of the financial institute or bank.

A npa consultant in india can take the business out of trouble by following the right path. It can use the property as third-party security for the borrower. It develops a viable and workable solution so that both banks and borrowers can safeguard their interests. It makes sure that none of these parties should feel cheated.

NPA consultants after Covid-19 outbreak

The role of the NPA consultant becomes furthermore crucial after the COVID-19 crisis. As we know there has been a great dent in the economy after the lockdown, MEME is the most impacted sector. NPA consultant is not just an expert in npa debt settlement, but it knows how to select and structure the right distribution channel and do product positioning. It knows how to design the strategy for “push or pull” process. It knows the ways of managing working capital.

A consultant ascertains areas that add value by raising finance from different channel partners or by searching for sound business propositions instead of taking more money on interest.

The consultants can offer training to the people working in MSME. It can counsel the top management to promote strategic thinking. Consultants try to recover from the NPA situation by making their clients financially strong instead of projecting financial problems.