Ahmedabad, Mar 4 (KNN) The 29th Meeting of the Standing Advisory Committee (SAC) to review the flow of credit to Micro, Small and Medium Enterprises (MSME) sector was convened today in Ahmedabad under the chairmanship of Swaminathan J, Deputy Governor of the Reserve Bank of India.
The meeting focused on addressing critical challenges facing the MSME sector and exploring strategies to enhance credit accessibility.
In his keynote address, the Deputy Governor emphasised the fundamental importance of the MSME sector to India’s economic development.
He reaffirmed the Reserve Bank’s dedication to bolstering institutional credit support through several key initiatives, including the Unified Lending Interface (ULI), the Account Aggregator framework, and the Regulatory Sandbox.
These platforms are designed to streamline credit delivery and foster innovation in financial services for MSMEs.
The Deputy Governor acknowledged several persistent challenges hindering MSME growth, particularly financial literacy gaps, information asymmetry between lenders and borrowers, and delayed payments.
To address these issues, he advocated for the implementation of digital solutions, alternative credit assessment models, and increased participation in platforms such as the Trade Receivables Discounting System (TReDS).
He further stressed the importance of fair lending practices, emphasising transparency and an empathetic approach when dealing with MSMEs experiencing financial distress.
Speaking after the meeting, Chairman of Banking Committee of Federation of Indian Micro and Small & Medium Enterprises (FISME) Neeraj Kedia expressed concern about banking practices prevalent in the Banking sector but are not in sync with the intent of the Government of India or RBI.
“ In spite of Framework for Revival and Rehabilitation (FRR) for MSMEs existing since 2016 the rate of rehabilitation is less than 0.5 % which shows that Banks are more interested in selling assets than reviving a temporary stressed unit:, ” he said.
The meeting included a comprehensive review of credit flow to the MSME sector and deliberations on multiple strategic areas.
Key topics of discussion included addressing the credit gap in the sector, promoting cash flow-based lending methodologies, implementing digital solutions for improved credit linkage, accelerating adoption of TReDS, enhancing utilisation of credit guarantee schemes, and developing proactive approaches for the revival and rehabilitation of financially distressed MSMEs.
The Deputy Governor also highlighted the vital role of MSME associations in capacity building and bridging information gaps to facilitate better access to credit for small businesses.
(KNN Bureau)
