Banks should focus separately on ‘micro’ customers from amongst the MSME segment: RBI
Mumbai, Feb 21 (KNN) There is a need for the banks for focussing separately on ‘micro’ customers from amongst the MSME segment, said RBI Governor SS Mundra adding that they generally lack adequate documentation, they fail to receive credit from the formal financial system.
Micro entities comprise a very ‘niche’ segment as these are mostly individual or family run businesses having very unique credit needs.
An estimate suggests that at present almost 93% of such units are outside the formal credit system.
He said RBI has initiated measures to expand the reach of banking services for unbanked population, regulating an efficient electronic payment system and providing alternative options to the MSME sector.
In order to solve the problem of delayed payment to MSMEs, RBI has licensed three entities for operating the Trade Receivables Discounting System (TReDS).
The objective is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay.
“The system would facilitate the financing of trade receivables of MSME enterprises from corporate and other buyers, including government departments and public sector undertakings (PSUs) through multiple financiers,” he said.
It is expected that the TReDS will commence operations within this current fiscal.
Also, he said an Udyami Mitra portal has been set up to leverage IT architecture of Stand-Up Mitra portal which aims at instilling ease of access to MSMEs’ financial and non-financial service needs.
The Portal, as a virtual market place endeavours to provide 'End to End' solutions not only for credit delivery but also for the host of credit-plus services by way of hand holding support, application tracking, multiple interface with stakeholders (i.e. banks, service providers, applicants).
Following the issuance of differentiated banking licenses, a number of Payment Banks/ Small Finance Banks (SFBs) have become/ will shortly become operational.
These banks will have the advantage of embracing state of art technology from beginning. Payment banks can’t lend directly but can be distributors of the credit products, while SFBs would predominantly be in MSME space.
This throws open meaningful oppurtunities for emergence of two-way/ three-way alliances between legacy bankers/ new banking entrants & fintech companies in the area of MSME financing. Key would be who develops a clear vision & moves fast, pointed Mundra. (KNN Bureau)
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