Context:
The Deputy Governor Swaminathan J mostly appealed for greater empathy from the banks toward MSEs who face financial deprivation. Digital solutions, alternative credit models, and wider acceptance of TReDS should be considered in order to improve MSME finances.
Delayed payments, information scarcity, and financial illiteracy were brought forward as the major issues.
The 29th meeting of the Standing Advisory Committee (SAC) took place in Ahmedabad concerning the review of MSME credit flow.
Recommendations by RBI for MSME Lending
- Empathy should lead the process
- Instead of strict measures, banks should show compassion and embrace MSEs in distress.
- Digitally enable
- Fintech solutions should be the order of the day for immediate credit access.
- A new horizon in credit appraisal
- Move from traditional parameters to dynamic lending based on trustworthiness in terms of repayment.
- Continuous use of TReDS
- TReDS be relied upon by banks for maintaining liquidity.
Hence, their take on ABI is that with MSMEs being the backbone of the Indian economy, the RBI advocacy for such innovative and inclusive banking solutions leads to fina
