Hyderabad, Jul 17 (KNN) The non-banking finance companies (NBFCs) in south India have managed to find an answer to “skirt around” the hurdles of documentation and traditional models of financing the MSMEs and the banks learnt from this experience, RBI Deputy Governor R Gandhi has said.

“…like any other region, this region also wants increased flow of credit for the Micro, Small and Medium Enterprises (MSME) sector. As is well known, despite continuous increase in the bank credit for the MSME sector, the formal credit flow for this sector is very meagre compared to the enormous number of units in this sector and the banking sector should tap the great potentials of this sector,” Gandhi said while speaking at an event organized here recently.

He was speaking about the Role of Financial Sector in the Growth of the Southern Region – A Question of Balancing at FINSEC - 2014 organised by FICCI.

Gandhi further said that, “The biggest hurdles facing the banking system are its requirements of documentation, its traditional models of assessing the credit needs of the MSMEs and many a time, the gap in the attitude and sensitivity of the bank officials.”

It is heartening to note that the non-banking financial companies (NBFCs) in this region have found a balanced answer to skirt around these hurdles and their flow to this sector has recorded good growth in recent times. Perhaps, the banking sector can also find such a balance, he added.

Gandhi said that the banking system should, instead, find a fine balance between managing these peculiarities and adhering to set best practices. (KNN Bureau)