RBI's New Initiatives to Support MSMEs and Boost Fintech Innovation

The Reserve Bank of India (RBI) is enhancing its regulatory approach to support Micro, Small, and Medium Enterprises (MSMEs) while fostering fintech innovation. With MSMEs contributing 30% to India’s GDP, their growth is crucial for the country's economic momentum. However, these businesses face hurdles in securing loans, financial literacy, and operational efficiency.

To address these challenges, the RBI has taken significant steps. In February 2024, it maintained the repo rate at 6.5% to stabilize borrowing costs, aiding MSMEs in financial planning and expansion. Additionally, the RBI has mandated that all regulated entities provide a 'Key Fact Statement' (KFS) for loans, ensuring transparency in loan terms and potentially increasing credit access for MSMEs.

The RBI's PRAVAAH portal and the Retail Direct mobile app streamline regulatory processes and investment opportunities. The Public Tech Platform for Frictionless Credit (PTPFC) further supports MSMEs by simplifying access to non-collateral-based loans, enhancing financial inclusion, and driving innovation.