With the Reserve Bank of India (RBI) trying to focus on ways to improve credit access to the MSME sector, Deputy Governor Michael Patra believes this year to be the RBI’s year of MSME. The central bank is working with banks to improve existing credit access for MSME and also reduce cost of credit. The central bank is considering launching a portal, which will be monitored by the RBI, to ensure easy credit access to MSME, he said.
“Of the 6 or 7 things we are taking on as deliverables for this year, I think this year will be the RBI’s year of MSME. We are already working with banks to ease the credit cycle and improve access to credit to MSMEs. We can think of different dispensations for MSME,” he said.
The RBI in 2020 announced the emergency credit line guarantee scheme (ECLGS) scheme, which led to an increase in loan demand. The scheme is extended till March 2023. On a year-on-year basis, the outstanding credit to MSMEs by banks increased by 13.4% in March 2022 compared to 10.6% a year ago, as per RBI’s annual report for FY22.
The central bank is also in talks with big businesses and various government departments to improve the payment cycles to MSMEs as such businesses do not get paid in time. For such small businesses payments not coming on time is always a pain point, Patra said.