‘Benefits of scheme for revival of NPA account is not permissible when MSME is closed or wound up'
The High Court of Karnataka has said that benefits of the scheme for restructuring or revival/rehabilitation of a bank account, which has become a non-performing asset (NPA), of a micro, small and medium enterprise (MSME) is permissible under the law only if the MSME is functioning.
Justice M. Nagaprasanna passed the order while rejecting a petition filed by M/s Metro Steel Section, which has questioned the proceedings initiated by the State Bank of India to recover about ₹18.5 crore loan due to the bank from the petitioner-firm.
It was contended on behalf of the petitioner that the benefit of rectification and restructuring of loan amount as has been provided in the notification, issued by the Reserve Bank of India (RBI) in 2015 under Section 19 of the MSME Development Act, 2006, ought to have been considered prior to resorting to recovering proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
However, the High Court said that the benefit of the RBI's notification and its interpretation by the apex court in the case of Pro Knits vs. Board of Directors of Canara Bank would not be available to the petitioner-firm as it was already closed when the bank resorted to recovery proceedings as stipulated in the 2015 notification of the RBI.
The court also pointed out that during the pendency of its petition, the petitioner-firm communicated to the bank indicating that it had wound up the business and closed the operation two years ago.
'If the firm has wound up the business and closed the operations two years ago, it cannot take the benefit of the firm being a MSME and the notifications issued under the MSMED Act or even the judgement of the apex court in Pro Knits case,' the court said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
43 minutes ago
- Time of India
Midcaps, Smallcaps, and IT appear overheated as valuations stretch, says Ram Medury, Maxiom Wealth
After a sharp rally in Indian equities, concerns are mounting over stretched valuations in certain pockets of the market. In this edition of ETMarkets Smart Talk , Ram Medury , Founder and CEO of Maxiom Wealth , shares his cautious view on midcaps, smallcaps, and the IT sector, which he believes are beginning to look overheated. While the broader market outlook remains constructive for the second half of 2025, Medury advises investors to tread carefully in segments that have run up too fast, too soon. He also offers insights into sectoral opportunities, asset allocation post the RBI 's rate cut, and the impact of global geopolitical and trade risks on Indian equities. Edited Excerpts – Q) Thanks for taking the time out. June is turning out to be a volatile month for D-Street. How is 2H2025 likely to pan out for Indian markets? Do you think most of the negatives are behind us? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Elegant New Scooters For Seniors In 2024: The Prices May Surprise You Mobility Scooter | Search Ads Learn More Undo A) We expect good rainfall in the upcoming monsoon period which may increase the earnings of 10-15% for agriculture-based stocks and also will help in reducing inflation at the base level. With the recent RBI rate cuts we assume a stable low inflation outlook but the global geopolitical scenario has changed quickly. As a large part of India's inflation is linked with crude oil we do have at least one negative ahead of us as oil price climbs. Overall, with increased spending on Infra by the government, the growth rate of the organised sector is expected to improve in H2. Live Events Q) What does a 50 bps cut mean for equity and bond markets? What should be an asset allocation strategy? A) A 50 bps rate cut by the RBI makes borrowing cheaper, boosting liquidity and supporting growth, which is positive for both equity and bond markets. In the current Indian scenario, rate-sensitive sectors like banks, autos, and real estate may see strong equity gains, while long-duration bonds are likely to rally as yields fall. Post the rate cut, Investors can consider increasing exposure to good quality stocks and on the fixed income side in Short duration/Accrual funds. A small allocation to gold can act as a hedge against potential inflation post recent geopolitical events. Q) What is your take on Q4 earnings from India Inc.? Any hits and misses which you tracked in the results? A) In the quarter ending Mar'25, YoY sales growth held steady near 9%, reflecting sustained business momentum. However, YoY PAT growth dropped to around 10% from nearly 17% in the previous quarter which can be counted as a 'miss'. Aggregate profit margins improved to 10%, returning to their recent peak. This would be a 'hit' as the trend continued for two consecutive quarters, indicating better operational efficiency in corporate India given the backdrop that both sales and profit growth receded from the prior quarter. Q) Nifty Bank hit a record high in June which suggests that there is a lot of interest in banking stocks. What is fuelling the rally in financials – is it the rate cut by RBI? A) The rate cut of RBI by 50 bps and CRR cut of 100 bps is expected to unlock 2.5 lakh crore for banks by Dec 25. This extra liquidity will help the banks in more disbursal and thereby improving their bottom-line and topline. The recent corrective measures by RBI to monitor MFI and unsecured lending as also result in lowering of distressed assets in big financial institutions which has also improved the overall health of banks' Balance Sheets. Q) Which sectors are likely to remain in limelight in the 2H2025? A) Banks and NBFCs would do well as a direct impact of the rate cut. The consumer durables sector is also expected to have a good run with increasing disposable income and increasing exports. With many of the consumer durables now working with MNCs to manufacture their products, there is room for growth in this sector. Defence is another sector that would do well given the geopolitical turbulence. Q) The tonality keeps changing from the US when it comes to 'Trade Talks'. Do you think it is still a relevant headwind for equity markets across the globe? A) The markets seem to be now shrugging off the initial apprehensions of tariff tantrums. US markets initially plunged after the new tariffs were announced in April 2025, with the S&P 500 falling nearly 15% at its lowest point. After a pause in tariff escalation and some policy walk-backs, markets rebounded, and the S&P 500 and Nasdaq are now modestly above where they started the year, while the Dow Jones remains slightly negative year-to-date. Despite the recovery, as of mid-June 2025, US markets have not fully regained their pre-tariff highs and remain volatile due to ongoing trade tensions and global uncertainties. Meanwhile, Indian markets have significantly outperformed US indices in the same period, reaching new highs and showing resilience despite global trade tensions and the US tariff shock. India has low trade exposure with the US if we consider direct import and export. But with the US tariff risk, comes global tariff risk which may impact the demand of Indian goods outside as competition intensifies. With the India US trade deal in talks and major new announcements coming up, we can expect India to be a beneficiary in few of the sectors like Auto Ancillaries and Electronics. Q) China equity markets are up in double digits while we have underperformed most EM peers. Does it make a case for global diversification? A) China's economy is growing at 5.4% but facing demographic and regulatory headwinds. While it holds strategic power in rare earths and currency innovation, export models are under strain. Its market remains undervalued, needing global trust to re-rate. Challenges loom, but scale and influence remain formidable on the world stage. Also, there is a lot of geopolitical tension all over the world, with three international borders on the boil, a lot of volatility is expected in all the major economies. Q) Which sector(s) is/are looking overheated and why? A) India's stock market rally has been broad-based, but concerns of overheating are rising in midcaps, smallcaps, IT and cyclical sectors like realty and metals. Valuations are appearing stretched, especially in mid and smallcaps, driven by strong retail inflows. IT is facing global demand and macroeconomic headwinds. The automobile sector, especially OEMs could be subdued this year, as the growth rate may be slower due to the high base last year. Despite gains, realty and metal sectors remain vulnerable to interest rate or commodity price shifts.
Business Standard
an hour ago
- Business Standard
India's forex reserves rise to $698.95 Billion
India's forex reserves rose USD 2.294 billion to USD 698.95 billion for the week ended June 13, the RBI said on Friday. For the week ended June 13, foreign currency assets, a major component of the reserves, rose by USD 1.739 billion to USD 589.426 billion, the data released on Friday showed. The gold reserves were up by USD 428 million to USD 86.316 billion during the week, the RBI said. The Special Drawing Rights (SDRs) also rose by USD 85 million to USD 18.756 billion, the central bank said. India's reserve position with the IMF also inched up by USD 43 million at USD 4.452 billion in the reporting week, the apex bank data showed.
New Indian Express
2 hours ago
- New Indian Express
What you should know about India's 'good' problems
India's corporate and banking sectors have come a long way. In 2016-17, the Economic Survey highlighted a twin-balance sheet problem for India's economy. There was a crisis in the balance sheets of corporates and banks. Public sector banks unveiled stressed assets that unleashed a slowdown before the Great Pandemic hit the economy. Cut to the present day, and you will notice that corporate and bank balance sheets are more robust than ever. The latest analysis by ICRA, a credit rating agency, shows that The Insolvency and Bankruptcy Code (IBC) is helping drive a change in the behaviour of borrowers and improving lenders' recovery. That is boosting the balance sheets of banks. Despite tepid credit growth, banks can maintain a strong balance sheet. Similarly, companies are sitting on record profits as a percentage of gross domestic product. They are utilising the money to repay debt. Businesses have already increased dividend payouts besides the buyback of shares. Companies either pay shareholders more cash, issue bonus shares, or both. That has enthused investors, and share prices are already near record highs. It is likely to continue to attract investors. The bad news about the good news Indian equity valuations are significantly higher than those of other key markets. While domestic mutual fund investors continue to support Indian listed companies with new money gathered every month, foreign portfolio investors are treading with scepticism. They are pulling out money at every new peak share price touch. A primary reason is that the external environment is getting difficult. Despite all the rhetoric about India turning into a manufacturing hub, the troubled geo-political situation and the US trade policies are likely to make job creation difficult. The latest minutes of the monetary policy committee quotes a survey of corporate performance that shows companies are paying off the debt with rising profits. Their capacity utilisation is above 75%, but the investment intentions have moderated in 2025-26. That means businesses do not want to invest in expansion. That causes a slowdown as fewer jobs are created. A primary reason for urban consumers' inability to spend more is worries about future income. If you live in a city, you are trying to meet all your expenditures and allocate money for your future. There is little space for ambition or early retirement due to a lack of income growth. The survey of corporate performance shows that companies are deleveraging their balance sheets with rising profits. Companies choose to pay back banks and reduce their interest burden with increased profits. Despite the capacity utilisation crossing beyond 75%, the investment intentions in manufacturing have moderated in 2025-26. The government will have to support the industry with further fiscal measures, and the RBI will have to focus on bringing down borrowing rates and take other measures that ease liquidity further in the financial system. It also shows the thinking about demand prospects. Experts are waiting and watching the impact of a cut in the personal income tax rates announced in Budget 2025. There is hope that it will leave more money in your hands to spend and revive the demand for consumption. What it means to your money There is a reason not to risk your money at this stage. Gold prices are near a record high. Share prices have continued to remain near historic highs. Most pundits advocate a 'bottom-up' investment approach. That means identifying companies with strong balance sheets and not trading at record highs. It is easier said than done for fund managers at institutions where they have access to a lot more information than you do. It is the right time to review investments towards your long-term goals. If share prices are consolidating, stronger balance sheets will ensure they get the necessary momentum for the next structural rally.
