RBI Regional Director Urges Public Sector Banks to Boost MSME Lending

Sujit Kumar Arvind, Regional Director of the Reserve Bank of India (RBI), Patna, on Friday called for immediate action from underperforming public sector banks to prioritize the disbursement of credit to deserving micro, small, and medium enterprises (MSMEs). Speaking at the 68th empowered committee meeting for MSMEs, held at the RBI Patna office, Arvind stressed the importance of improving lending performance to support the sector’s growth.

During the meeting, which brought together state heads of 14 major banks, Arvind also urged private sector financial institutions to enhance their engagement in government-sponsored schemes, ensure loans are covered under the Credit Guarantee Scheme, and assist informal micro enterprises in formalizing through the Udyam Assist Portal.

The empowered committee, which meets quarterly, reviews and evaluates the performance of banks in extending credit to MSMEs. This session was attended by senior officials from various government departments and industry associations, focusing on several crucial areas.

Key discussion points included segment-wise lending progress, the issuance of collateral-free loans, management of stressed assets, non-performing assets (NPAs), and the banks’ performance in implementing government schemes. For the July-September 2024 quarter, the member banks collectively achieved over 44.7% of their annual credit targets while showing a reduction in NPAs and stressed assets.

Arvind emphasized the need for banks to comply with the framework for the revival and rehabilitation of stressed MSME units to ensure their sustained growth and contribution to the economy.

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