SIDBI, RRBs plan to expand co-lending arrangement to boost MSME credit in rural areas
New Delhi, August 26
SIDBI and Regional Rural Banks are set to expand their co-lending arrangement to improve access to credit for micro, small and medium enterprises in rural and semi-urban areas, with the government stressing the need to leverage the banks' wider reach and SIDBI's expertise in MSME lending.
The proposed expansion was discussed at a conclave of the heads of all 28 RRBs organised by SIDBI in New Delhi and chaired by Department of Financial Services Secretary Sanjay Lohiya.
The arrangement is aimed at combining SIDBI's understanding of MSME credit requirements with the extensive network of RRBs across smaller towns and villages. The government said the model could help RRBs diversify their loan portfolios by increasing their focus on MSME lending, while rule engine-based underwriting is expected to support asset quality.
The conclave also focused on using MSME cluster data to identify and reach a larger number of businesses. The Department of Financial Services urged RRBs to make MSME lending under the co-lending arrangement an important target for their branches.
The government also highlighted the role RRBs could play in supporting India's next-generation manufacturing ecosystem and improving financial awareness among MSMEs, including through participation in state government-led Rozgar Melas.
A key part of the proposed expansion is SIDBI's Co-Lending Origination Platform, an end-to-end digital system designed to make the credit process faster and paperless.
The platform allows loan applicants to receive in-principle sanctions within a short turnaround time after submitting the required details. Digital documentation and disbursement also allow funds to be transferred directly to borrowers' bank accounts without requiring branch visits.
The pilot programme has already been implemented at three RRBs, with the government saying the results have been encouraging. The proposed expansion to more RRBs is expected to help address credit requirements, particularly among micro and small enterprises in rural and semi-urban areas.
SIDBI CMD Manoj Mittal urged RRBs to participate actively in the arrangement and help make the expanded programme successful.
The conclave also underlined the need for RRBs to use their rural reach more effectively to support MSME growth, with the expanded co-lending model expected to provide a wider channel for businesses to access formal credit.
— ANI
Leave a comment