FM Sitharaman Urges PSBs to Quickly Implement MSME Budget Measures
Finance Minister Nirmala Sitharaman has directed public sector banks (PSBs) to 'expeditiously implement' the recent Budget announcements aimed at enhancing credit access for micro, small, and medium enterprises (MSMEs).
During a performance-review meeting with heads of PSBs, Sitharaman emphasized the need for banks to promptly apply the Budget’s new credit assessment model, which will rely on digital footprints and cash flows rather than traditional asset-based methods. This initiative is designed to improve credit access for MSMEs, particularly those without formal accounting systems.
The Finance Minister’s review covered a range of topics including banks’ financial parameters, deposit mobilization, digital payments, and cybersecurity frameworks. She stressed the importance of expanding financial inclusion and addressing other emerging issues related to credit access.
In her first full Budget under the Modi 3.0 administration, Sitharaman announced the development of a new assessment model by PSBs, which will use digital footprints to evaluate MSMEs' creditworthiness. This approach aims to replace the conventional asset or turnover-based underwriting of MSME loans. Additionally, PSBs are expected to enhance their internal systems for credit assessment, reducing reliance on external evaluations.
Sitharaman also highlighted the need for improved deposit mobilization to support sustainable credit growth. She urged banks to conduct special drives to boost deposit collections and improve funding for credit expansion.
Moreover, the Finance Minister called for increased credit flow to eligible borrowers under government schemes such as the PM Surya Ghar Muft Bijli Yojana and the PM Vishwakarma Yojana. The Budget introduced several measures to support MSMEs, including a Rs 100-crore credit guarantee scheme for collateral-free term loans and a government-backed fund to assist stressed MSME loan accounts, preventing them from becoming non-performing assets.
