RBI Governor Sanjay Malhotra Highlights Timely Credit Access for MSMEs as Ongoing Policy Focus

Efforts to strengthen financing access for small businesses remain a key area of focus for India’s central bank. 

During a stakeholder interaction, Sanjay Malhotra, Governor of the Reserve Bank of India, emphasised the need to ensure timely and sufficient formal credit for micro, small and medium enterprises (MSMEs). 

The discussion formed part of ongoing consultations aimed at addressing operational challenges and improving credit delivery across the sector.

Focus on Credit Availability for MSMEs

The governor stated that expanding access to formal financing for MSMEs continues to be an important policy objective for the central bank. Ensuring that businesses receive credit at the right time and in adequate amounts is viewed as essential for sustaining operations, supporting expansion and improving financial stability within the sector.

The RBI has been engaging regularly with industry participants to better understand financing constraints faced by smaller enterprises.

Role of MSMEs in the Economy

During the interaction, the central bank highlighted the contribution of MSMEs to economic activity, exports and employment generation. The sector plays a significant role in supporting supply chains and regional economic development, making access to institutional finance a critical component of broader economic policy.

Officials noted that strengthening MSME financing frameworks can help improve productivity and business continuity.

Policy Measures and Regulatory Support

The governor outlined various regulatory and policy initiatives introduced by both the central government and the RBI to improve credit flow to smaller businesses. These measures are intended to encourage lending institutions to expand outreach while maintaining prudent risk management standards.

Such initiatives also aim to reduce structural barriers that often limit smaller firms’ ability to access formal banking channels.

Encouraging Formalisation and Digital Adoption

MSME representatives were encouraged to adopt formal business practices, maintain credit discipline and increase the use of digital payment systems. According to the RBI, these steps can help businesses build stronger financial records, improve creditworthiness and enhance long-term competitiveness.

Digital adoption was also discussed as a means to improve transparency and streamline financial operations.

Industry Feedback and Stakeholder Discussions

The meeting included participation from MSME associations and business representatives, who shared feedback on policy matters and operational challenges affecting credit availability. Participants discussed issues related to lending processes, documentation requirements and access to working capital.

Deputy governors of the RBI were also present during the session, contributing to discussions on improving institutional support mechanisms.

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Conclusion

The interaction reflects the RBI’s continued engagement with industry stakeholders to address financing challenges faced by MSMEs. While policy measures are already in place, ongoing dialogue between regulators and businesses is expected to play a role in refining credit delivery systems and supporting sustainable growth within the sector.

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