Traditional Methods of assessing credit worthiness unsuitable for MSMEs: S S Mundra, Deputy Governor, RBI

18 June, 2017


Traditional methods of assessing credit worthiness do not work for MSMEs. This was said by the Deputy Governor, Reserved Bank of India – S. S. Mundra at ASSOCHAM’s 3rd National Summit- Bankers Borrowers Business Meet 2017 in New Delhi. The Deputy Governor added that India has over 50 million MSMEs that account for one third of the country’s GDP. It is, therefore, essential for Banks to understand the credit cycle of MSMEs, he observed.

Presenting the banking perspective, the Managing Director, State Bank of India – P K Gupta observed that MSMEs in India have traditionally suffered from a high-risk perception. However, banks are now moving from balance sheet financing to supply chain financing, he added.

Delivering the Theme Address, the Chairman and Founder, Capital First – V Vaidyanathan observed that we need to encourage more lenders to cater to underserved sectors like the MSME.

The event saw the release of a Knowledge Paper on Bankers Borrowers: 10 Emerging Mantras, jointly prepared by ASSOCHAM and Ashvin Parekh Advisory Services. It also witnessed extensive deliberations on issues related to Digitisation, E-commerce, Evolving Clusters, Trade Finance, Capacity Building, Alternate Finance, Credit Rating, GST, IND-AS and Bankruptcy Law, besides a presentation on Facilitating Credit Worthiness for MSMEs. Prominent dignitaries who participated in the summit included Member of Parliament and Former President of ASSOCHAM – R N Dhoot; Managing Partner, Ashvin Parekh Advisory Services LLP – Ashvin Parekh; MD and CEO, UCO Bank- RK Takkar, Head- SMEAG Business, ICICI Bank Ltd- Murali Ramakrishnan, Chairman of ASSOCHAM Special Task Force on GST and Leader Indirect Tax ,PwC- Pratik Jain, Secretary General of ASSOCHAM – D. S. Rawat and Former CMD Indian Overseas Bank and Senior Adviser, ASSOCHAM National Council for Banking and Finance – M Narendra, besides others.