Lending to MSMEs Makes Strong Business Sense: Rajan

File photo: RBI Governor Raghuram Rajan
File photo: RBI Governor Raghuram Rajan
New Delhi: Reserve Bank of India Governor Raghuram Rajan on Tuesday said lending to micro, small and medium enterprises’ (MSME) entrepreneurs, particularly in the e-commerce space, makes a strong business sense for banks given the changing dynamics of the economy.

“Lending to MSME entrepreneurs, especially in e-commerce space makes a strong business case for the banks given the changing dynamics in the economy, such as, demographic patterns; urbanization trends; increasing disposable income and dependence on technology platforms; growth in internet user base and availability of easy payment options,” Mr Rajan said.

With continuous handholding of MSME entrepreneurs, bankers can help them sell their products on e-commerce space and reach a huge market space without having brick and mortal presence, he said at the Town Hall organised by the RBI here.

Financing of micro, small and medium enterprises (MSMEs) across the world has become very significant in recent years, he said, while addressing MSME entrepreneurs, who are also suppliers for e-commerce like Amazon, Snapdeal and FlipKart.

The Town Hall, arranged to create awareness of banking facilities for MSME enterprises engaged in e-commerce business, was attended by MDs of Punjab National Bank and Oriental Bank of Commerce, and senior officials of the government and industry.

Speaking at the meeting, RBI Regional Director Deepak Singhal emphasised the need for clarity in terms of regulating this new and fast growing sector in view of rapidly changing business models and technology advancement.