What changed
RBI has mandated that issues pertaining to the MSME sector must be included and discussed in all future SLBC meetings. This follows the earlier revision of the priority sector definition for small scale and small business enterprises to align with the MSMED Act, 2006.
What it means for you
Banks and SLBCs must now formally prioritize MSME credit challenges in their coordination meetings. This ensures state-level focus on timely and adequate credit flow to MSMEs, especially in identified clusters, as part of the broader priority sector lending framework.
What you must do
- Include MSME sector issues as a standing agenda item in all SLBC meetings.
- Discuss problems faced by MSMEs in your state/UT and document action points.
- Review institutional arrangements for MSME credit delivery, particularly in identified clusters.
- Ensure alignment with the MSMED Act, 2006 definition for priority sector classification.
Who it affects
SLBC convenor banks, All scheduled commercial banks, State-level banking coordination committees, MSME borrowers
What is the key requirement of this circular?
SLBC convenors must ensure that MSME sector financial needs are discussed in every SLBC meeting, and problems faced by the sector are addressed.
Why was this circular issued?
To improve credit delivery to MSMEs following the alignment of the priority sector definition with the MSMED Act, 2006, as proposed in the 2007-08 Annual Policy Statement.
Does this apply to all states and union territories?
Yes, the instruction is directed to all SLBC convenors across states and union territories.