In the first full budget under the Modi 3.0 government, Sitharaman had announced that PSBs will lead the development of an assessment model based on the digital footprint of MSMEs to also cover MSMEs without a formal accounting system.
Finance Minister Nirmala Sitharaman on Monday asked public sector banks (PSBs) to “expeditiously implement” announcements made in the budget to boost credit access for micro, small and medium enterprises (MSMEs).
Chairing a performance-review meeting with PSBs’ heads, Sitharaman said “Banks must expeditiously implement recent Budget announcements, including, a new credit assessment model for #MSMEs based on digital footprints and cash-flows.”
The finance minister reviewed banks’ financial parameters, deposit mobilisation, digital payments and cyber security framework, in addition to access to credit under financial inclusion and other emerging issues, according to a statement by the finance ministry.
In the first full budget under the Modi 3.0 government, Sitharaman had announced that PSBs will lead the development of an assessment model based on the digital footprint of MSMEs to also cover MSMEs without a formal accounting system in order to move away from the traditional method of underwriting MSME loans based on asset or turnover.
Moreover, PSBs will strengthen their in-house system for assessing the creditworthiness of MSMEs instead of depending on external assessment, Sitharaman had announced.
Speaking on deposits, Sitahraman said while the credit growth has “picked up, mobilisation of deposits could further be improved to fund the credit growth sustainably and asked banks to make concerted efforts to garner deposits by conducting special drives.”
She also asked banks to further increase credit flow to eligible borrowers under different government schemes such as PM Surya Ghar Muft Bijli Yojana and PM Vishwakarma Yojana.
The budget had announced a number of measures to enhance credit to MSMEs such as a Rs 100-crore credit guarantee scheme to enable term loans for procuring machinery and equipment without collateral or third-party guarantee.
