New Delhi, Nov 20 (KNN) The central government is thinking of making several changes in the non-banking finance companies (NBFCs) rules to extend cheaper loans to micro, small and medium enterprises (MSME), reported HT. 

It is likely to raise the deposit acceptance limit of eligible non-banking finance companies (NBFCs).

The government is also considering to introduce deposit insurance, and providing a dedicated liquidity window for NBFCs to reduce their cost of funds, two officials told HT.

Next to agriculture, the MSME sector is the backbone of the Indian economy, with about 30% share in its GDP, 45% of manufacturing output and 48% of exports, while providing 111 million people with employment. 

Both agriculture and MSME sectors are facing huge credit gaps. About 39% of 63.4 million MSMEs have not yet accessed loans through any formal channel.

Hence, there is an urgent need to expand formal but affordable credit facilities through NBFCs if India has to become the world’s third-largest economy by 2030, the officials told HT requesting anonymity.

(KNN Bureau)