Union Finance Minister Nirmala Sitharaman gave a policy speech at the 11th SBI Banking & Economics Conclave 2024 in Mumbai on November 18 when she pointed out that banks have a crucial part in the development of the Indian economy and set ambitious goals for lending to Micro, Small, and Medium Enterprises (MSMEs). The event was named ‘Making Aspiration of Viksit Bharat a Reality.’
Sitharaman pinpointed the rapid shift in Indias global position in economy saying, “Only in 2013-14, it was apparent that India ranked as the 10th largest economy in the world. After that, the scale of development increased gradually and during the 2021-22 financial year, the company occupied the 5th place. Perhaps, the upcoming few years we will be reaching the 3rd position. Banks of course are very instrumental in assisting the country to progress and not at the normal speed.
She emphasized for digital money inclusiveness that she defined as key for guarantee that effective and efficient digital solutions are within the reach of all individuals including the places of residence. We must also strive hard to bring new and better products, and keep on identifying ways to carry on the process of financial inclusion, so every coloured man in India, or might he be residing in the corner of the country, be a part of it. The RBI, she added, pointed out that there are digital divide in terms of usage, cyber security measures, and even mobile banking app ratings across different segments Zhao.
Speaking about the significance of credit to the MSME sector, Sitharaman laid down several high credit direction for the banks. She said, “Just a few days ago, I laid down a goal of an additional MSME lending of Rs 1.54 lakh crore in this financial year for the Scheduled Commercial Banks and NBFCs, over and above to the estimated Rs 4.21 lakh crore to be lent this year with carry-on business Modalities.” Therefore, the Met’s planned raising of £100 million a year in the next two years will be sustained. Banks should target lending, as I said, Rs 1.54 lakh crore more this year than Rs 4.21 lakh crore business as usual.”
Sharing specific objectives for the next few years, the finance minister shocked bank chiefs stating “Banks should look at an MSMEs credit portfolio of Rs 6.12 lakh crore for FY26 and Rs 7 lakh crore for FY27.” The setting of these targets was in line with the governments policy to support the growth of the MSME sector that has remained a major source of employment and economic growth.
More so, Sitharaman urged that when extending credit to the companies, banks ought to employ a systematic strategy, so that MSMEs can be supported and strengthen to foster the economy. It should not only be geared towards achieving a set lending portfolio but also include initiatives aimed at enhancing access and educating the public with financial products; especially those that would be establishment owners within the remote areas.
The minister also stressed a role of technology and innovation in effective implementation of financial strategies in the country. Technological inclusion in financial solutions continues to be a fundamental part of India’s plan for progression in the economic perspective, particularly looking at the issue of the digital gap and improving security levels in cyberspace. ‘We really must have a digital financial inclusion as one of the very important goals so that cheap digital ways-how can reach everybody,’ she said.
The RBI, through its employees, has spotted inequity between sections and groups and considered mobile banking services’ standard and digital disparities between banking groups requires constant enhancement. In Sitharaman’s words, solving these problems would be vital if all the sectors of population have to transform and avail the new-technology revolution.
The finance minister’s observations made at the conclave could not have come at a better time when India is gearing for a great leap to become one of the leading economies in the world. Serving as the un powered engine of this transition the MSME sector is often refer to as the backbone of the Indian economy. The outlined targets symbolize the governments willingness to encourage efficiency improvement in this sector by improving financial access.
Touching upon the sectoral realities too, Sitharaman’s address also extrapolated to economic dreams and PRIME Minister’s vision of a ‘Viksit Bharat’ or a developed India. These goals will need to be met through collaboration between the government, financial institutions and industrial players. Promises of technological connectivity, secure operation of its systems and enhanced credit to the MSMEs are some of the key components of this vision.
In conclusion, the finance minister urged banks to get more involved, be creative and be more proactive in achieving such targets. In so doing the banks are able to support the growth of the MSMEs hence the general progress of the India economy and it’s vision of making the country among the third largest economy in the globe.
