RBI Governor Urges Banks: Treat MSMEs as Long-Term Partners, Not Short-Term Borrowers

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday urged banks to treat Micro, Small and Medium Enterprises (MSMEs) as long-term partners, describing them as the 'nursery of entrepreneurship' and a key driver of the government's 'Viksit Bharat' vision.

Speaking at a special awareness programme for MSME entrepreneurs in Kochi, organised in connection with International MSME Day 2026 (June 27), Mr. Malhotra highlighted the upcoming Unified Lending Interface (ULI) as a technology-based initiative aimed at streamlining credit appraisal and making frictionless credit available to every Indian. He said the platform aligns with the government's broader vision of digital empowerment, financial inclusion, and last-mile service delivery.

The Governor also encouraged entrepreneurs to use the Trade Receivables electronic Discounting System (TreDS), an RBI-regulated digital platform that helps MSMEs unlock working capital. He stressed the importance of financial discipline and transparency for MSMEs.

Mr. Malhotra noted that MSMEs contribute around 45 per cent of India's exports and provide employment to about 33 crore people, the largest job generator outside the agriculture sector. 'These are not just numbers. These are the testament to the ambitions, dynamism and perseverance of MSMEs,' he said.

He praised Kochi's entrepreneurial legacy, from the spice trade to emerging sectors like fintech and clean energy. He also observed that MSME credit growth has outpaced overall credit growth, with Kerala performing strongly.

The RBI chief outlined several measures already initiated by the central bank to narrow the credit gap, including priority sector lending targets, a higher collateral-free loan threshold, TreDS, the Account Aggregator framework, and waiver of pre-closure charges.

The event, organised by the RBI's Thiruvananthapuram office, aimed at enhancing financial literacy among MSME entrepreneurs, improving awareness about formal credit channels, and facilitating interaction between entrepreneurs, bankers, and government agencies.

The programme featured technical sessions on access to credit, innovative financing solutions, MSME support schemes offered by SIDBI, RBI initiatives for the MSME sector, and various schemes implemented by central and state governments. Successful entrepreneurs shared their experiences and insights, providing practical guidance to aspiring and existing MSME entrepreneurs.