Finance Minister Nirmala Sitharaman emphasised the important role MSMEs play in India’s economy, underscoring the need for a sensitive and opportunity-driven approach from the banking sector. Speaking at the 11th SBI Banking & Economics Conclave 2024, she urged banks to adopt cash flow-based lending, which can revolutionise working capital solutions for MSMEs, and highlighted India’s robust banking infrastructure.
Sitharaman addressed the importance of digital financial literacy to instil public trust in digital transactions, linking it to the larger goal of ‘Viksit Bharat.’ She celebrated financial inclusion milestones achieved since 2014 through Jan Dhan Yojana and DBT, with account access jumping from 35% to 77% of adults between 2011 and 2021, bridging financial divides.
Acknowledging the resilience of Public Sector Banks (PSBs), she pointed to their impressive financial performance, noting a 14.4% YoY growth in operating profit and a 25.6% rise in net profit for H1FY25. She emphasized that PSBs, with clean balance sheets and robust earnings, are well-positioned for long-term project financing.
The Finance Minister announced government support for collateral-free loans for MSMEs and stressed the potential of innovative credit risk models to support entrepreneurship and employment. She also set ambitious MSME lending targets for the coming years, promising continued vigilance from the government to ensure economic growth.
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India’s foreign exchange reserves, she added, are strong enough to cover 11.8 months of imports and exceed 100% of external debt. The government remains committed to making India the world’s third-largest economy.