RBI Governor Urges Banks to Embrace Digital Transformation for MSMEs
Quick Look
- RBI Governor Sanjay Malhotra called on banks to treat MSMEs as vital partners, not just compliance.
- He urged investment in digital transformation, R&D, and innovation, and leveraging digital infrastructure like Account Aggregator and ULI for efficient credit delivery.
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Why It Matters
RBI Governor Sanjay Malhotra spoke at an event celebrating International MSME Day 2026 in Kochi, emphasizing the need for banks to digitally transform their approach to MSMEs.
Reserve Bank of India (RBI) Governor Sanjay Malhotra Monday urged banks to step up digital adoption and fundamentally change their approach towards micro, small and medium enterprises (MSMEs), saying the sector should be treated as a long-term business partner rather than a regulatory obligation.
He was speaking in celebration of the International MSME Day 2026 in Kochi on Monday. He advised entrepreneurs 'to take ownership of your growth by investing in technology, R&D and innovation as consumer preferences and expectations evolve."
Malhotra said financial institutions must invest in digital public infrastructure such as the Account Aggregator framework, Unified Lending Interface (ULI) and Trade Receivables Discounting System (TReDS) to enable faster, data-driven and inclusive credit delivery.
He also called on lenders to accelerate implementation of schemes including priority sector lending, MUDRA and credit guarantee programmes.
He emphasised the need for a "reorientation" in how banks view MSMEs, with relationship-based lending, supported by digital data, playing a key role in expanding sustainable financing to the sector.
Open Questions
- What specific targets have banks been given for digital adoption?
- How will the success of these digital initiatives be measured?
- What support will be provided to MSMEs to adapt to digital lending platforms?
