Digital illiteracy among micro units is one of the challenges in supporting credit: Rana Ashutosh Kumar Singh of SBI

By Prerna M.

Credit and financing for MSMEs: Even though digital reach exists for a large number of micro businesses based in the hinterland of India, digital illiteracy perhaps among some of these businesses is one of the challenges in providing a credit support, said Rana Ashutosh Kumar Singh, Deputy Managing Director (Transaction Banking & New Initiatives), State Bank of India (SBI). Singh also called for the need for more financial literacy among these companies. “Banks do that. The Reserve Bank of India (RBI) also does this. We also have advice centers. So things are already looking up.

SBI has 341 Financial Education Centers (FLCs) in 28 states and five union territories, according to the bank’s website. In February 2009, the RBI had asked banks to set up FLCs to offer free financial literacy and credit counseling to all segments of society.

On the sidelines of the FE MSME Business Conclave in June, Singh also hailed the government portal Jan Samarth launched by Prime Minister Narendra Modi in June this year to enable faster access to credit for micro units.

“It’s basically (a portal for) 13 credit-related government programs where you have end-to-end scanning. From the sourcing of applications to the sanction or disbursement, the process is fully digitalized. So this type of activity and innovation is happening particularly in the micro-sector,” he added.

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Among the 13 schemes, business loans are provided under the Prime Minister’s Job Creation Scheme (PMEGP), Weaver Mudra Scheme, Mudra Yojna, PM SVANidhi, Self-Employment Scheme for the rehabilitation of manual waste pickers and the StandUp India program via the Jan Samarth portal.

Singh also noted the role of cash flow based lending in supporting MSMEs. “Bankers, other lenders or NBFCs also have MSME data coming directly from the GST portal. With visibility into actual business cash flow, the credit decision becomes much easier. Also, with the account aggregation framework, it will be much easier (to support MSMEs). »