Daijiworld Media Network - New Delhi
New Delhi, May 25: Nirmala Sitharaman on Monday urged the banking sector and Small Industries Development Bank of India to move away from standardised loan products for micro, small and medium enterprises (MSMEs), stressing that India’s small businesses require customised credit structures suited to their business cycles.
Addressing SIDBI’s Foundation Day event, Sitharaman said “standard products cannot serve non-standard businesses”.
“A farmer-linked enterprise does not earn every month. A resort does not earn evenly throughout the year. A garment exporter waits for payment after shipment. A small auto-component supplier waits for invoice clearance. A woman entrepreneur may have regular transactions yet no property in her name. Then why should all of them be given the same repayment structure?” she asked.
The Finance Minister said credit systems should be designed around the business cycle of each enterprise.
For agri-processing MSMEs, she suggested repayment schedules linked to harvest cycles. Textile exporters, she said, required financing aligned with export cycles, while tourism businesses needed repayment structures that accounted for seasonal earnings.
“The aim should be to provide the right credit for the right enterprise and at the right time for the right purpose,” Sitharaman said.
She further said SIDBI should evolve beyond its traditional role as a lender and become a “market-maker” and “risk-sharing partner” for MSMEs and startups.
“SIDBI should stop being in the comfort zone of saying, ‘I am a lender to small enterprises’. You are now going to be the market-maker. You are now going to be the risk-sharing partner for all MSMEs and for the entire startup ecosystem,” she said.
Sitharaman also called for strengthening the venture debt market for startups and expanding cash flow-based lending and digital lending partnerships, particularly for first-time borrowers.
Highlighting delayed payments as a major challenge faced by MSMEs, the minister said nearly ?8.1 trillion remained locked in pending dues.
She said the government regularly reviews payment timelines of central public sector undertakings to ensure MSME dues are cleared within the mandated 45-day period.
Linking MSME financing with the country’s broader economic goals, Sitharaman said more than 32 crore Indians were employed in and through the MSME ecosystem.
“If we get MSME credit right, we get the Indian middle class right. If we get the Indian middle class right, we get Viksit Bharat right,” she added.