Framework for accreditation of credit counsellors on anvil: RBI

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New Delhi | Updated: August 23, 2016 3:52:34 PM

In order to ease flow of credit to MSME sector, RBI Deputy Governor S S Mundra today said the apex bank would soon put in place a framework for accreditation of credit counsellors who are expected to serve as facilitators for small businesses.

To increase presence of banking system, Mundra said, the RBI has given licence 10 entities for small finance bank.To increase presence of banking system, Mundra said, the RBI has given licence 10 entities for small finance bank.

In order to ease flow of credit to MSME sector, RBI Deputy Governor S S Mundra today said the apex bank would soon put in place a framework for accreditation of credit counsellors who are expected to serve as facilitators for small businesses.

“For bridging the information asymmetry on the MSME borrowers side, the RBI is initiating a process for putting in place a framework for accreditation of credit counsellors who are expected to serve as facilitators and enablers for micro and small entrepreneurs,” he said at an industry event.

Since MSMEs are enterprise with little credit histories and with inadequate expertise in preparing financial statements, credit counsellors will assist the borrowers in preparing their projects reports and also help banks make better informed credit decisions, he said.

Mundra also said the RBI will soon issue final guidelines for Peer to Peer (P2P) lending.

New players have entered MSME lending landscape in form of P2P companies, he said, adding these entities use an online platform to match lenders with borrowers to provide unsecured loans and mostly for receivables financing.

P2P lending has potential as an alternative form of low-cost finance as it can reach to the needy where formal sources are unable to reach or unwilling to lend, he said.

He noted that RBI has been mindful of a need to regulate these entities without stifling their ability to innovate.

To increase presence of banking system, Mundra said, the RBI has given licence 10 entities for small finance bank.

A couple of them have started operation and remaining will be operational during course of the year, he said.

In order to solve the problem of delayed payment to MSMEs, he said, the RBI has licenced three entities for operating the Trade Receivables Discounting System (TReDS).

“The system would facilitate the financing of trade receivables of MSME enterprises from corporate and other buyers, including government departments and public sector undertaking through multiple financiers,” he said.

The objective is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay, he said.

It is expected that the TReDS would commence operations within this current fiscal, he said, adding it would be important that its use is made mandatory for, to begin with corporates and PSUs, and later for the government departments.

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