Reserve Bank of India (RBI) Governor Shaktikanta Das, said that the Indian Micro, Small and Medium Enterprise (MSME) sector has a lot of scope for improving its competitiveness.

Speaking at the recently held 15th Annual Banking Summit at Hotel Taj Mahal Palace, Colaba, Mumbai, Shaktikanta said , “The challenges in the MSME sector is confined to infrastructure bottlenecks, absence of formalisation, some inertia to technology adoption, capacity building, backward and forward leakages, lack of access to credit and risk capital and perennial problem of delayed payments by large corporates, which naturally effects the business cycle of the MSMEs.”

“Players in the MSME sector need to do quite a bit with regard to improving their competitiveness by adopting new technologies, accepting e-payments, and try and foster inhouse innovation and inhouse product quality improvement. They should also I feel try and expand in size and reduce the dependence on the incentives structure,” he added.

Niranjan Hiranandani, President, ASSOCHAM said, “The time is right for Indian Banking system to be resurrected out of its Cancer ailment. The economic data is flashing warning signs and pressing alarming bells to rejig and redesign sickening banking structure. The overhanging distressed loans need a cleaning spree with the fresh fiscal stimulus to pump in desired liquidity and relive the choked banking sector. Fresh borrowing and lending to the priority and labour intensive sector is crucial to recoup financial growth.”

Another sector that will play a key role in achieving the target of $5 trillion economy is the MSME sector.

MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades.

MSMEs not only play a crucial role in providing large employment opportunities at comparatively lower capital cost than large industries, but also help in industrialization of rural & backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth. MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country.

Hence, there is a need to ensure funding for MSME sector. There is a need to create an enabling environment and supporting infrastructure for improving access to financing and credit cycles. All components of the infrastructure, such as the MSMEs, Banks, NBFCs, MUDRA Bank, Credit Rating Agencies, FinTechs, etc. need to work in tandem, so that the required funding is done to all the sectors with ease.