Need to scale up lending to MSMEs in rural, semi-urban areas: DFS Secretary
Department of Financial Services (DFS) Secretary Sanjay Lohiya has underscored the need to scale up lending to MSMEs in rural and semi-urban areas given the importance of the sector in the economy.
Speaking at a conclave organised by the Small Industries Development Bank of India (SIDBI) on Tuesday, Lohiya said RRBs will also be able to achieve their goal of diversifying their loan portfolios by focusing on MSME lending, and rule engine-based underwriting is also expected to help them maintain good asset quality.
The conclave attended by Chairmen of all 28 Regional Rural Banks (RRBs), SIDBI CMD Manoj Mittal and other senior officials focused on expanding the SIDBI-RRB MSME Co-Lending arrangement, the finance ministry said in a statement on Wednesday.
During the conclave, the Secretary emphasised the importance of scaling up MSME lending in rural and semi-urban areas.
The proposed arrangement synergises the strengths of SIDBI, which understands the credit needs of MSMEs, and RRBs, which have an excellent reach across the smaller towns and villages of the country, he said.
DFS Additional Secretary Debasish Prusty, while addressing the conclave, indicated the importance of MSME cluster data for a focused approach to reaching out to a large number of MSMEs. RRBs should contribute towards making the country a next-generation manufacturing hub and also take an active part in Rozgar Melas conducted by state governments to disseminate financial awareness among MSMEs, he said.
He also suggested that RRBs make MSME lending through this co-lending arrangement an important target for branches.
Speaking at the event, SIDBI Chairman and Managing Director also urged the RRBs to come forward and make the arrangement a success.
The Co-Lending Origination Platform developed by SIDBI is an end-to-end digital platform providing a faster and paperless credit journey, resulting in the quick sanction and disbursement of loans, it said.
Loan applicants will be informed of their in-principle sanctions within a very short turnaround time once all the details are provided through the application portal, it said.
The digital documentation and disbursement process also ensures that customers receive loan disbursements directly into their accounts without the need to visit branches at any stage of the process, it said.
With encouraging outcomes from the pilot implementation at three RRBs, the proposed expansion of this Co-Lending programme to more RRBs is expected to significantly address the credit needs of borrowers, especially in the Micro and Small segments, in rural and semi-urban areas, it added.
