Federation of Chambers of Industries Kashmir (FCIK) Urges Jammu and Kashmir Government for Resolution of Non-Performing Assets in MSME Sector
In a recent statement, the Federation of Chambers of Industries Kashmir (FCIK) reiterated its call for urgent intervention by the Jammu and Kashmir government to address the issue of Non-Performing Assets (NPAs) in the Micro, Small, and Medium Enterprises (MSME) sector. The FCIK emphasized the need for a structured and compassionate resolution for sick MSME accounts that have faced distress due to various external factors beyond the control of the entrepreneurs.
According to FCIK, the industrial sector in Jammu and Kashmir has been facing severe constraints in accessing institutional credit since 1989. The closure or limited operations of many banks and financial institutions in the region have left J&K Bank as the primary source of credit. This has resulted in a lending environment with higher interest rates than the national average, strict collateral requirements, and low credit-deposit ratios for MSMEs.
The FCIK acknowledged a positive shift in the approach of J&K Bank’s current leadership but expressed concerns about the continued publication of SARFAESI and e-auction notices in local newspapers. These actions not only create social stigma but also cause psychological stress and reputational damage to entrepreneurs who have defaulted due to prolonged instabilities, lockdowns, delayed payments, natural disasters, and economic disruptions spanning several decades.
After discussions with the Managing Director of J&K Bank, FCIK was assured of a concrete solution, including the implementation of a Special One-Time Settlement (SOTS) scheme and adherence to RBI guidelines for MSME account revival and restructuring. The Federation highlighted the importance of following Government of India guidelines, which have been deemed mandatory by the Supreme Court before classifying MSME accounts as NPAs.
While a high-level committee has been formed by the UT government to address the NPA issue, FCIK expressed concerns about the lack of tangible outcomes and ongoing coercive recovery measures. The Federation emphasized that a delay in instalments should not automatically lead to the declaration of MSME accounts as NPAs, followed by SARFAESI Act actions.
FCIK called for a moratorium on coercive actions such as SARFAESI notices, e-auctions, unit sealings, recovery suits, and the engagement of recovery agents. The Federation stressed the importance of settling issues before enforcement to prevent unnecessary litigation, mental distress, and business closures.
FCIK committed to ensuring full compliance and settlement by MSMEs under its purview, provided that the settlement framework is fair, uniform, and non-discriminatory. The Federation also highlighted the historical challenges faced by many MSMEs in terms of mortgage values and interest rates during turbulent years, advocating for fair principal haircuts in line with concessions granted to enterprises in other parts of the country.
