MSME body pitches unified regulator; seeks banking oversight shift

According to Fisme, the Indian banking system operates under conditions of monopolistic competition, with high switching costs giving banks significant market power over borrowers, particularly MSMEs

Ahead of the Union Budget 2026, the Federation of Indian Micro and Small & Medium Enterprises (Fisme) has written to the Prime Minister’s Office (PMO), proposing the creation of a unified financial sector regulator covering banking, insurance, and fintech. Fisme’s argument is that fragmented oversight and weak grievance redressal mechanisms are constraining credit access for micro, small, and medium enterprises (MSMEs).

 

In a reform blueprint titled “Next-Generation Economic Reforms for MSME-Led Industrial Growth in India”, the industry body has recommended carving out the banking regulation function from the Reserve Bank of India (RBI) and merging it with the Insurance Regulatory