MUMBAI: Reserve Bank of India (RBI) Deputy Governor Swaminathan J has called on banks to adopt a more supportive and flexible approach in lending to micro, small, and medium enterprises (MSME) struggling with financial distress.
Speaking at the 29th meeting of the Standing Advisory Committee (SAC) in Ahmedabad on Monday, Swaminathan emphasised the need for faster credit access, innovative risk assessment models, and greater adoption of digital lending platforms to bridge the financing gap in the MSME ssector.
Highlighting the challenges faced by MSME sector – such as delayed payments, lack of financial literacy, and credit constraints – he urged banks to actively participate in platforms like Trade Receivables Discounting System (TReDS), which helps businesses unlock working capital by facilitating invoice discounting.
He also pushed for wider implementation of alternative credit assessment models for MSME sector that rely on cash flow data rather than traditional collateral-based lending.
Unified Lending Interface
The RBI, he said, is working to strengthen institutional credit support through initiatives like the Unified Lending Interface (ULI), the Account Aggregator framework, and the Regulatory Sandbox – all aimed at making credit more accessible to MSMEs. So far, under ULI, Rs14,500 crore has been disbursed to about 1.6 lakh MSMEs.
The SAC meeting brought together senior officials from RBI, major banks, the Ministry of MSME, the Department of Financial Services (DFS), the Indian Banks’ Association (IBA), and MSME industry representatives.
Discussions centered on expanding cash flow-based lending, increasing the usage of credit guarantee schemes, and streamlining the revival and rehabilitation process for distressed MSMEs.
A more structured lending approach, Swaminathan noted, will not only ease the financial burden on MSMEs but also improve credit flow, enhance business stability, and drive economic growth.
