# What do SMA-0, SMA-1 and SMA-2 mean on my MSME loan, and what does the bank do next?

Canonical: https://senseible.earth/answers/msme-loan-sma-0-sma-1-sma-2-meaning

They are early warning stages before a loan becomes an NPA. Under RBI's MSME revival framework, SMA-1 means principal or interest is 31 to 60 days overdue and SMA-2 means 61 to 90 days. SMA-0 means not more than 30 days overdue but showing signs of stress. Every SMA-2 account must be examined for a corrective action plan.

## The three stages

- SMA-0: principal or interest not overdue for more than 30 days, but the account shows signs of incipient stress.
- SMA-1: principal or interest overdue for 31 to 60 days.
- SMA-2: principal or interest overdue for 61 to 90 days.

## Signs that can put you in SMA-0

- Stock statements or financial statements delayed by 90 days or more.
- Sales or operating profit 40% or more below the projections the loan was sanctioned on.
- Drawing power cut by 20% or more after a stock audit.
- Three or more cheques or debit instructions returned in 30 days for lack of balance.
- A third request for more time to create security or meet a sanction condition.

## What happens at SMA-2

For loan limits above ₹10 lakh, the branch must send the account to the bank's Committee for Stressed MSMEs, normally within five working days. For limits up to ₹10 lakh, the branch manager or a designated official must examine it. Recovery as the chosen option needs the committee's agreement.

## The three possible outcomes

- Rectification: you commit to clear the overdue with identifiable cash flows, sometimes with short ad hoc finance.
- Restructuring: if the business is viable and you are not a wilful defaulter.
- Recovery: only when the first two are not feasible.

## Act before SMA-2

The framework covers MSMEs with loan limits up to ₹25 crore, and you do not have to wait for the bank. You can apply yourself if you see trouble coming.

## What Senseible does here

Senseible does not see or report loan status. If high fuel or power costs are part of the stress, its bill-based records show where the energy money goes.

- [Asking your bank for an MSME revival plan](https://senseible.earth/answers/msme-revival-framework-apply-for-restructuring)
- [Penal charges on MSME loans](https://senseible.earth/answers/penal-charges-msme-loan-rbi-rule)
- [Raising MSE working capital mid-year](https://senseible.earth/answers/msme-working-capital-mid-year-review-ad-hoc-limit)

Sources: [RBI circular FIDD.MSME & NFS.BC.No.21/06.02.31/2015-16, Framework for Revival and Rehabilitation of MSMEs, 17 March 2016: paras 1, 2.1, 2.2, 5.3 and Annex I](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10304&Mode=0), [RBI, Master Direction, Lending to Micro, Small and Medium Enterprises (MSME) Sector, updated 9 February 2026: para 4.6](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11060)

Last reviewed 2026-10-24.