RBI Advice on Easing MSME Credit: Empathy, Digital, TReDS
Why in the news
At a review of MSME credit flow, the RBI asked banks to treat struggling small firms with understanding and adopt newer lending methods.
Key facts
- Forum: 29th Standing Advisory Committee (SAC) meeting, Ahmedabad.
- Hurdles: delayed payments, information gaps, weak financial literacy.
Recommendations
| Theme | Advice to banks |
|---|---|
| Empathy | Support distressed enterprises, not harsh measures |
| Digital | Use fintech for quick credit |
| Appraisal | Move beyond traditional parameters to repayment-based dynamic lending |
| TReDS | Keep using it for liquidity |
Exam angle
- TReDS is advised for MSME liquidity.
- MSMEs are called the economy’s backbone.