RBI Guv Malhotra ask banks to treat MSMEs as long-term business partners
Last Updated:June 23, 2026, 00:00 ISTRepresentational image (Image: News18)Kochi, Jun 22 (PTI) Reserve Bank Governor Sanjay Malhotra on Monday asked banks and lending institutions to internalise a fundamental. . .
Last Updated:June 23, 2026, 00:00 ISTRepresentational image (Image: News18)Kochi, Jun 22 (PTI) Reserve Bank Governor Sanjay Malhotra on Monday asked banks and lending institutions to internalise a fundamental reorientation in their approach towards MSMEs, and view them as long-term business partners rather than just a regulatory obligation. Speaking at the inauguration of a week-long celebration of International MSME Day 2026 here, he said MSMEs collectively contribute 31 per cent of GDP, account for approximately 35 per cent of manufacturing output, and represent close to half of India’s merchandise exports, while sustaining livelihoods for over 32 crore people. “These are not just numbers, but a testament to the ambition, dynamism, and industry of our MSMEs," Malhotra said. The Governor further said the Reserve Bank of India (RBI) and the government have undertaken a series of measures to improve access to finance for MSMEs, including collateral-free loans, enhanced credit guarantee cover, the Trade Receivables Discounting System (TReDS), the Account Aggregator framework and the Unified Lending Interface (ULI). Malhotra said RBI’s regulatory and facilitative measures, along with several government schemes, including MUDRA and CGTMSE, have led to a significant improvement in formal credit to micro, small and medium enterprises (MSMEs). Consequently, the credit outstanding by commercial banks to the MSME sector stood at Rs 36. 79 lakh crore as on December 31, 2025, registering a compound annual growth rate (CAGR) of around 15 per cent over the past five financial years. In Kerala, too, he said banks’ credit to MSMEs grew at a healthy CAGR of 13. 5 per cent in the past five financial years, with credit outstanding at Rs 1 lakh crore as on December 31, 2025. “While considerable progress has been made, I would not stand here and say that we have covered the credit gap. We have not. But, I would certainly say that we have made considerable progress in meeting the financing needs of the MSME sector in the last few years. “I would confidently claim that we have covered a lot of the gap. Moreover, we have covered the gap at a fast pace," Malhotra added. The Governor also asked financial institutions to invest in the country’s digital public infrastructure, accelerate the implementation of government-backed credit schemes and help create a more inclusive credit ecosystem for small businesses. “…we look to banks and lending institutions to internalise a fundamental reorientation in their approach. MSMEs should not be considered as a regulatory obligation alone, but as long-term business partners whose sustained growth generates durable financial returns and broad social value," the Governor said. He also asked the MSMEs to invest in technology, R&D and innovation as consumer preferences and expectations evolve. The central bank has established an institutional mechanism for structured engagements with the MSMEs, and its regional offices have been conducting MSME Town Hall Meetings, providing a dedicated platform for direct dialogue with entrepreneurs, lenders, and ecosystem stakeholders. PTI NKD KSI KSI(This story has not been edited by News18 staff and is published from a syndicated news agency feed -PTI)News18 NewsletterHandpicked stories, in your inboxA newsletter with the best of our journalismFirst Published:June 23, 2026, 00:00 ISTNewsagency-feedsRBI Guv Malhotra ask banks to treat MSMEs as long-term business partnersDisclaimer: Comments reflect users’ views, not News18’s. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to ourTerms of UseandPrivacy Policy. Loading comments. . . Read More