RBI Committee Explores Cash-Flow Lending to Boost MSME Credit Access

The 30th Standing Advisory Committee (SAC) of the Reserve Bank of India convened in Coimbatore on October 27, 2025, to tackle significant financial challenges within India's Micro, Small, and Medium Enterprises (MSME) sector. The meeting, led by RBI Deputy Governor Swaminathan J, brought together key stakeholders including officials from the RBI, Ministry of Finance, major public sector banks, and industry associations.

A primary focus was to enhance credit accessibility for MSMEs, particularly by addressing the persistent credit gap. The committee explored strategies such as promoting innovative cash-flow-based lending and accelerating the adoption of digital platforms like TReDS (Trade Receivables Discounting System). Discussions also revolved around strengthening credit guarantee schemes and developing frameworks for the revival and rehabilitation of MSMEs facing distress. The overarching goal is to foster a more resilient and accessible financial ecosystem for this vital sector.

Impact: This initiative can significantly improve the financial health and growth prospects of millions of MSMEs in India. By enabling easier access to credit through modern lending methods, it can spur economic activity, create jobs, and foster innovation. A more robust MSME sector contributes directly to national economic growth and stability. Rating: 8/10

Difficult Terms: MSME: Micro, Small, and Medium Enterprises. These are businesses categorized based on investment in plant and machinery and annual turnover, playing a crucial role in India's economy. RBI: Reserve Bank of India, the central bank of India responsible for monetary policy and regulation of the banking system. TReDS: Trade Receivables Discounting System. A digital platform that facilitates the financing of trade receivables of MSMEs. NBFCs: Non-Banking Financial Companies. Financial institutions that provide services similar to banks but do not hold a full banking license. Account Aggregators: A type of NBFC that helps individuals and businesses consolidate and share their financial data securely with financial service providers. GST filings: Goods and Services Tax filings, which are reports of tax liability submitted by businesses to the government.