Mumbai (Maharashtra) [India], Mar 6 : New technologies are enabling lenders to appraise loan proposals of micro, small and medium enterprises (MSMEs) expeditiously by doing due diligence online, Reserve Bank of India Governor Shaktikanta Das said on Friday.
The traditional bank lending system by banks is based on financial statements and collateral of the borrower.
"With the increased availability of data from several sources including Goods and Service Tax Network (GSTN), income tax and credit bureaus, it is now possible to appraise the MSME loan proposals expeditiously by doing due diligence online," he said while addressing the 15th ASSOCHAM Annual Banking Summit here.
While both the government and the RBI have introduced a plethora of measures for improving access to finance and to promote the growth of the sector, Das said the small size of individual units and informal nature of the sector continue to pose challenges.
"The need is to have a right set of policies and enabling framework which guide and support MSMEs to effectively handle their existing problems and venture into new areas," he said.
Some lenders are collaborating with fin-tech compes to take advantage of such surrogate data for speedier credit underwriting for extending loans to the MSME sector. These new architectures will expand the reach of credit, said Das.
"Given the fact that the MSME sector contributes significantly to exports, it is essential that they should be integrated with global value chains to remain competitive as it offers unique opportunity to become technologically and digitally empowered," he added.
( With inputs from ANI )