Mumbai, Oct 8 (KNN) The high profile RBI Committee formed to improve credit flow to the small and medium enterprises (SMEs) has invited comments from different stakeholders by end of this month.
 
The RBI Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households constituted under the Chairmanship of Nachiket Mor, Member of the Central Board of Directors, Reserve Bank of India. The 13-member committee includes former CEO of Citi Group, Vikram Pandit.

"The committee has decided to invite suggestions from various stakeholders with a view to enabling them to share their thoughts on the subject," RBI said in a release.


The committee is mandated to frame a clear vision for improving comprehensive finance services for small businesses and low income households.


The committee will submit its final report by December 2013 and has been mandated to, “frame a clear and detailed vision for financial inclusion and financial deepening in India.”

It will also lay down a set of design principles that will guide the development of institutional frameworks and regulation for achieving financial inclusion and financial deepening.


Also, it will review existing strategies and develop new ones that address specific barriers to progress and that encourage participants to work swiftly towards achieving full inclusion and financial deepening, consistent with the design principles.


Significantly, the expert panel will develop a comprehensive monitoring framework to track the progress of the financial inclusion.

The small-scale industry has been facing problems like decline in exports, high cost of credit, lack of skilled workforce and tough entry and exit policies.

SMEs face severe constraints as far as bank credit is concerned, forcing them to go for alternative financing sources, especially trade credit. The alternative financing through informal sources involves higher transaction costs as well as interest costs as compared to bank finance.

The sector has been witnessing a slow growth phase with share of exports falling from 40 per cent to 36 per cent lately.

The MSME sector employs over 60 million people in about 2.61 crore units and contributes about 45 per cent to the manufacturing activities. (KNN/SD)