MSMEs Seek Credit Scheme Extension

Tue, 14 October 2025

14:46

Industry bodies representing micro, small, and medium enterprises (MSMEs) have urged the Reserve Bank of India to consider extending the Emergency Credit Line Guarantee Scheme (ECLGS) and introducing a more transparent and standardised lending framework to strengthen the resilience of India's small businesses.

The proposal was made at a meeting convened last week by the RBI's financial inclusion and development department to address challenges facing the MSME sector due to the impact of 50 per cent US tariffs.

Chaired by RBI Executive Director Neeraj Nigam, the meeting brought together key industry associations including the India SME Forum, Laghu Udyog Bharati, Dalit Indian Chamber of Commerce and Industry, Madhya Pradesh Small Scale Industries Association, Coimbatore District Small Industries Association, Karnataka Small Scale Industries Association, and the All India Association of Industries.

Leading banks such as State Bank of India, Punjab National Bank, HDFC Bank, Axis Bank, and Kotak Mahindra Bank, along with representatives from the Indian Banks' Association, also participated.

Sushma Morthania, director general of the India SME Forum and president of the Women Entrepreneurs Forum, said MSMEs across critical sectors such as textile, pharmaceutical, agriculture, and gems and jewellery are grappling with sudden tariff shocks that disrupt cash flows and risk pushing fundamentally viable enterprises into default.

"An extension of the ECLGS will provide a vital liquidity lifeline to MSMEs struggling with tariff-related financial stress," Morthania said, emphasising that timely credit and transparent lending mechanisms are essential to prevent viable enterprises from slipping into distress.

The forum also sought creation of a transparent application interface within the Unified Lending Interface to ensure uniformity in loan processing, margin requirements, fees, and penal charges -- minimising branch-level discretion and ensuring fair treatment of borrowers.

-- Harsh Kumar, Business Standard

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