Unlocking Potential: Addressing MSMEs' Financial Challenges

The financial sector must adopt a joint approach to address the challenges faced by MSMEs, including high interest rates and lack of due diligence in SME listings. Ashwani Bhatia of Sebi emphasizes the importance of partnerships between financial institutions and fintech companies to deliver data-centric solutions and improve credit access through digital and government policies.

A united strategy is essential for the financial sector to address the hurdles faced by MSMEs, such as high borrowing costs, Sebi Whole-Time Member Ashwani Bhatia said on Monday.

Speaking at CII's Financing Summit 3.0 on 'Unlocking the True Potential of MSMEs: Financing Options', Bhatia stressed that collaboration between financial institutions and fintech firms is crucial to provide data-driven solutions for MSMEs. He highlighted the substantial funds raised through SME listings and the need for stringent checks to prevent malpractice.

Bhatia noted that while the startup ecosystem is booming, with numerous unicorns and decacorns, a cautious approach is necessary in SME listings to ensure long-term relationships between intermediaries and companies. He urged financial professionals to act responsibly and avoid overly aggressive practices.

Alternative funding routes such as crowdfunding and venture capital are also viable for MSMEs, Bhatia said, noting the crucial role of digital transformation and government policies in enhancing financial access.

Ateesh Singh from the Ministry of MSME mentioned that finance and technology are key to unlocking the sector's potential, while Mastercard India's Rajnish Kumar noted improvements in borrower risk assessment due to technological advancements.

(With inputs from agencies.)