Need to promote wider use of digital solutions: RBI Deputy Governor

Swaminathan says steps like ULI facilitate cash-flow-based lending

To address challenges such as information asymmetry, financial literacy gaps, and delayed payments, the focus should be on promoting wider adoption of digital solutions, said Reserve Bank of India (RBI) Deputy Governor Swaminathan Janakiraman while chairing the 30th Standing Advisory Committee (SAC) meeting to review the flow of credit to micro, small, and medium enterprises (MSMEs).

 

The deputy governor said that digital platforms such as the Trade Receivables Discounting System (TReDS) encourage alternative credit assessment models and ensure fair, transparent, and empathetic lending practices for the rehabilitation of distressed but viable units.

 

He also urged MSME associations to play a greater role in capacity building and bridging information gaps to help enterprises better leverage formal financial channels.

 

At the meeting, SAC reviewed the flow of credit to MSMEs and discussed ways to address the sector’s credit gap.

 

Cash-flow-based lending and digital solutions to improve credit linkage, accelerate the adoption of TReDS, enhance the use of credit guarantee schemes, and support the revival and rehabilitation of MSME units were among the measures discussed.

 

Swaminathan added that initiatives such as the unified lending interface, the account aggregator framework, and the regulatory sandbox are facilitating data-driven and cash-flow-based lending.

 

Industry associations highlighted challenges arising from geopolitical uncertainty and sought the intervention of the government, regulators, and banks.

 

The 30th meeting of SAC to review the flow of credit to the MSME sector was held in Coimbatore on October 27.

 

It was attended by RBI executive directors, an additional secretary from the Ministry of MSME, a joint secretary from the Department of Financial Services, chairman of Small Industries Development Bank of India, and other senior industry representatives.