Budget 2023: MSME-Focussed Digital Lending Industry Expects Govt-Backed Funding, Documentation Ease

The digital lending sector in 2022 saw the RBI putting in place norms to curb rising malpractices in the digital lending space. As the Budget 2023 is around the corner, the industry is expecting measures to boost the industry and MSMEs, including measures like expanding the availability of government-backed financing, easing the documentation for MSME loans, and creating a fund to provide subsidies on MSME loans.

The Union Budget will be presented by Finance Minister Nirmala Sitharaman on February 1.

Ritesh Jain, co-founder of Flexiloans.com, said, “As the Indian government prepares for the upcoming budget, it is essential to address the challenges facing the micro, small, and medium enterprises (MSME) sector. Many small business owners need help to succeed, including difficulties in dealing with the government and accessing credit. These challenges can limit the growth and potential of the MSME sector, which plays a vital role in the economy.”

He added that the government could consider enhancing the scope of the guarantee programme for MSME loans, creating a fund to provide subsidies on MSME loans, expanding the availability of government-backed financing, easing the documentation for MSME Loans by classifying all loans given in current accounts as MSME loans for government schemes, and extending all government schemes to service providers.

Arvind TCA, co-founder of Artfine, said, “To protect MSMEs, the government should impose a priority sector obligation on insurance providers. Only one transaction under the IRDA has occurred in the past year. Credit insurance has made it possible for vendors, SMEs, and MSMEs to cover risks and take expansion plans into consideration.”

He added that the government should encourage the flow of credit-related information. Some signature developments in the budget announcement are needed to expedite the process and enable retail banking for SME companies.

Arun Poojari, CEO and co-founder of Cashinvoice, said medium businesses must be included in MSME Facilitation Councils, which currently only serve micro and small enterprises according to the MSME Development Act, 2006. It is necessary to include the medium enterprises in the Micro and Small Enterprises Facilitation Councils for the settlement of delayed payments from buyers.

Poojari added that the Budget 2023 should utilise or encouraging MSMEs for import substitution as part of the Make in India programme.

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