<h1>Indian Banks Struggle with Rising Bad Loans Post-Demonetization, MSMEs Hit Hard Despite Extended Repayment Deadlines.</h1> The banking sector in India is expected to face continued challenges with bad loans in the coming year, particularly affecting the MSME sector, due to cash shortages following the demonetization of high-value currency notes in November 2016. This policy caused banks to focus on exchanging old notes instead of credit growth and loan recovery, leading to significant losses. Public sector banks reported a substantial increase in gross non-performing assets, while private lenders also saw a rise in bad loans. The Reserve Bank of India has extended repayment deadlines, but concerns remain about rising NPAs and reduced credit demand.