Mumbai, Reserve Bank Deputy Governor Swaminathan J called on financial institutions to adopt a more sensitive and empathetic approach towards MSMEs and deploy supportive measures, such as loan restructuring options, to support the sector that plays a role key in the economy.
In a speech delivered at the Annual Day of Foreign Exchange Dealers Association of India (FEDAI), the Lt Governor said MSMEs face challenges such as access to affordable finance, delayed payments, infrastructure bottlenecks and compliance requirements, inter alia.
India's economic transformation journey cannot be complete without the robust development of the MSME sector.
"MSMEs are not only the backbone of our economy, they are the engines of growth, innovation and employment," he said at the event held on Wednesday.
However, for these companies to truly thrive and grow, the financial sector must step up with innovative solutions, sensitivity and a forward-thinking approach, Swaminathan said.
"It's not just about providing credit; it's about enabling these companies to compete globally, boost exports and contribute to the nation's goal of becoming a developed economy by 2047. While financial instruments and support mechanisms are crucial "The way we engage with the MSME sector, our sensitivity to their challenges and our commitment to their success will ultimately determine the strength and sustainability of this partnership," he stated.
The deputy governor also emphasized that considering the key role that MSMEs play in the economy, the financial sector should adopt a more sensitive and empathetic approach towards them.
"While financial discipline is crucial, the unique challenges faced by MSMEs, such as low capital base, lack of scale, cash flow limitations from delayed payments, fluctuating market conditions and external economic pressures, require a more nuanced approach to evaluation as well as monitoring," he said.
While timely payment of dues is crucial to maintaining the health of the financial system, financial institutions should focus on implementing supportive measures such as restructuring options, grace periods, and customized payment plans that give MSMEs the breathing room they need. they need to recover and return to normal. track while we encounter difficult situations, said the senior official at the event attended by representatives of the financial sector, among others.
He further said that the financial sector can play a crucial role in boosting MSME exports by offering targeted support and customized services that address the unique challenges faced by these businesses in the global market.
Beyond traditional products such as pre- and post-shipment financing, factoring and invoice discounting, the sector can significantly help MSMEs manage risks through export credit insurance and foreign exchange risk hedging solutions. .
These financial instruments not only protect against defaults and currency fluctuations, but also give MSMEs the confidence to explore and expand into new international markets, he said.
Swaminathan also highlighted the various initiatives taken by the Reserve Bank to promote innovation in MSME financing.
Recently, the third cohort of the RBI's Regulatory Sandbox was dedicated to MSME lending, where five ideas were considered viable.
In a speech delivered at the Annual Day of Foreign Exchange Dealers Association of India (FEDAI), the Lt Governor said MSMEs face challenges such as access to affordable finance, delayed payments, infrastructure bottlenecks and compliance requirements, inter alia.
India's economic transformation journey cannot be complete without the robust development of the MSME sector.
"MSMEs are not only the backbone of our economy, they are the engines of growth, innovation and employment," he said at the event held on Wednesday.
However, for these companies to truly thrive and grow, the financial sector must step up with innovative solutions, sensitivity and a forward-thinking approach, Swaminathan said.
"It's not just about providing credit; it's about enabling these companies to compete globally, boost exports and contribute to the nation's goal of becoming a developed economy by 2047. While financial instruments and support mechanisms are crucial "The way we engage with the MSME sector, our sensitivity to their challenges and our commitment to their success will ultimately determine the strength and sustainability of this partnership," he stated.
The deputy governor also emphasized that considering the key role that MSMEs play in the economy, the financial sector should adopt a more sensitive and empathetic approach towards them.
"While financial discipline is crucial, the unique challenges faced by MSMEs, such as low capital base, lack of scale, cash flow limitations from delayed payments, fluctuating market conditions and external economic pressures, require a more nuanced approach to evaluation as well as monitoring," he said.
While timely payment of dues is crucial to maintaining the health of the financial system, financial institutions should focus on implementing supportive measures such as restructuring options, grace periods, and customized payment plans that give MSMEs the breathing room they need. they need to recover and return to normal. track while we encounter difficult situations, said the senior official at the event attended by representatives of the financial sector, among others.
He further said that the financial sector can play a crucial role in boosting MSME exports by offering targeted support and customized services that address the unique challenges faced by these businesses in the global market.
Beyond traditional products such as pre- and post-shipment financing, factoring and invoice discounting, the sector can significantly help MSMEs manage risks through export credit insurance and foreign exchange risk hedging solutions. .
These financial instruments not only protect against defaults and currency fluctuations, but also give MSMEs the confidence to explore and expand into new international markets, he said.
Swaminathan also highlighted the various initiatives taken by the Reserve Bank to promote innovation in MSME financing.
Recently, the third cohort of the RBI's Regulatory Sandbox was dedicated to MSME lending, where five ideas were considered viable.
