Digital Lenders Association urges government to ease financing norms for easy credit to MSMEs

New Delhi, Mar 8 (KNN) Eyeing at increasing credit flow to the Micro, Small and Medium Enterprises (MSMEs), the Digital Lenders Association of India (DLAI) has requested the government to consider easing financing norms for the sector.

The association has urged the government to reduce the pre-securitization holding period and permit them a high spread over refinancing rates for Non-Banking financial Companies (NBFCs) under the Micro Units Development & Refinance Agency (MUDRA) scheme.

In order to become eligible for securitization, minimum holding period for a term loan should be relaxed for loans of amount less than 25 lakh  to micro, small and medium enterprises (MSMEs), the association said.

Presently as per the RBI norms, term loans of up to two years to be retained on the originators’ balance-sheets for a minimum of three months before they become eligible for securitization.

Sashank Rishyasringa, Co-founder and MD of Capital Float in a press interview  said a large number of loans disbursed by digital lenders were short-term in nature.

He said the biggest challenge is that many borrowers’ take short-term loans and the minimum holding period requirement is very difficult to meet for short-tenure loans.

Another recommendation made by the association is with regard to the final rate.

“There should be an increase in the limit on the final rate of NBFCs charge over the refinancing rate under the MUDRA scheme”, it said.

For loans up-to Rs 5 lakh, limit should be increased to 10-12%, for loans amount between Rs 5 and 25 lakh, limit should be increased to 8-10%.

Present rate is capped at 6% over the rate of refinancing for NBFCs

Further they made a recommendation that public-sector banks be mandated to pass on all the leads that have been rejected by them for various reasons to digital lenders.

Also association has requested the government to pass the notification mandating the police to file cases of cheques being dishonored on the basis of digital loan agreement as many digital lenders are facing problems in e-signatures on loan agreements during the recovery process, where courts ask for wet signature on physical loan agreement or police asks for hard copies of agreement.

Further, the Know Your Customer (KYC) norms plaguing mobile wallet players are posing problems for digital lenders as well, the memorandum raised. (KNN/YV)