RBI's Financial Stability Report: Special efforts for SMEs underway

The Reserve Bank of India on Thursday released its Financial Stability Report (FSR) December 2016 and rolled out a capacity building programme named as ‘National Mission for Capacity Building of Bankers for Financing the MSME Sector’ (NAMCABS). 

The programme will be run in collaboration with CAB, Pune and will look to develop entrepreneurial sensitivity amongst banks’ field-level functionaries for lending to the MSME sector.

RBI said that in order to provide a simpler and faster mechanism to address stress in the accounts of Micro, Small and Medium Enterprises (MSMEs), in March 2016, a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’ was issued to banks, in consultation with Government of India. 

The bank in the report said that the to provide financial support to Micro and Small Enterprises (MSEs) during their life cycles, in August 2015, banks were advised to review their existing lending policies to the MSE sector. 

"Accordingly, these policies were required to be modified by incorporating therein, among others, the provisions for sanctioning of a standby credit facility in case of term loans, additional working capital limits, a midterm review of regular working capital limits and timelines for credit decisions," RBI said.

RBI said that it has initiated a pilot project for setting up 100 Centres for Financial Literacy (CFL) at the block level to scale up the existing Financial Literacy Centres (FLCs) infrastucture.

"As on March 2016, 1,384 FLCs were operational. During 2015-16, 87,710 financial literacy activities (outdoor camps) were conducted by FLCs," RBI said.

As per the report, RBI is planning to take further steps for improving the financial literacy levels which include, among others, designing and implementing capacity building programmes for FLC counsellors and bank branch heads in rural areas and conducting surveys for obtaining insights on financial knowledge, attitudes and behaviour of the people.