Sanjay Malhotra, Governor of the Reserve Bank of India, on Monday February 16, 2026, emphasised that improving access to timely and adequate formal credit for micro, small and medium enterprises MSMEs continues to remain a key policy priority for the central bank.

Speaking at a meeting held in Mumbai with select representatives of MSME associations, Mr. Malhotra underlined the importance of strengthening the credit ecosystem to ensure that small businesses receive the financial support they need to grow, innovate and generate employment.

The meeting was attended by RBI Deputy Governors T. Rabi Sankar, Swaminathan J. and S.C. Murmu, along with other senior officers of the central bank and representatives from various MSME associations.

Strengthening formal credit access

The RBI Governor stated that timely and adequate access to formal credit is essential for the health and sustainability of MSMEs. He noted that many small enterprises continue to face difficulties in accessing bank finance due to procedural issues, documentation requirements and limited collateral.

He stressed that improving credit flow to the sector is not only about expanding lending volumes but also about ensuring that credit reaches deserving enterprises at the right time and at reasonable cost.

According to Mr. Malhotra, MSMEs play a vital role in India’s economic structure. They contribute significantly to employment, manufacturing output and exports. Therefore, ensuring their smooth access to finance is crucial for sustaining economic growth.

Importance of MSMEs in the economy

The MSME sector is often described as the backbone of the Indian economy. It accounts for a large share of industrial production and exports. It also provides employment to millions of people across urban and rural areas.

In recent years, the sector has faced multiple challenges including supply chain disruptions, rising input costs and tighter financial conditions. Access to credit has remained one of the most critical concerns raised by MSME associations.

The RBI Governor acknowledged these challenges and said that the central bank is committed to addressing structural bottlenecks in the credit delivery system.

Policy and regulatory measures

During the meeting, Mr. Malhotra outlined several policy and regulatory measures undertaken by the RBI and the Government of India to improve financing conditions for MSMEs.

He highlighted steps aimed at simplifying loan procedures, encouraging digital lending platforms, strengthening credit guarantee mechanisms and promoting faster loan approvals.

The Governor also referred to regulatory adjustments designed to make lending to MSMEs more attractive for banks and financial institutions. These measures include easing compliance requirements in certain areas, encouraging cash flow-based lending models and promoting alternative credit assessment methods.

He said the RBI continues to review its policies in consultation with stakeholders to ensure that they remain responsive to the evolving needs of small businesses.

Direct engagement with industry representatives

The meeting in Mumbai was part of the RBI’s ongoing outreach efforts. By engaging directly with MSME representatives, the central bank aims to understand ground-level challenges and gather feedback on existing policies.

Participants from MSME associations shared their experiences related to credit availability, interest rates, documentation processes and working capital constraints.

According to officials present at the meeting, discussions also covered issues such as delayed payments, access to export finance and the role of digital platforms in improving transparency.

The presence of all three Deputy Governors underlined the importance the central bank attaches to MSME-related issues.

Focus on financial inclusion

The RBI Governor emphasised that improving MSME credit access aligns with the broader goal of financial inclusion. Many small enterprises, especially in semi-urban and rural areas, continue to rely on informal sources of funding due to limited access to formal banking channels.

He said the RBI is working to expand the reach of the formal financial system through initiatives such as digital banking, improved credit information systems and enhanced coordination with financial institutions.

Formal credit ensures better transparency, lower borrowing costs and stronger legal protections for borrowers.

Role of technology in credit delivery

Mr. Malhotra also spoke about the increasing role of technology in improving credit access. Digital platforms and fintech solutions have made it easier for MSMEs to apply for loans, track approvals and manage repayments.

He said the RBI is encouraging responsible digital lending practices while ensuring that consumer protection standards are maintained.

The adoption of digital tools can reduce processing time and improve risk assessment through data-driven models. This can help banks extend credit to smaller enterprises that may not have traditional collateral.

Collaboration with the Government

The Governor noted that the RBI works closely with the Government of India to strengthen the policy framework for MSMEs.

Government-backed credit guarantee schemes, subsidy programmes and sector-specific initiatives complement the RBI’s regulatory measures.

He said coordinated action between regulators and policymakers is necessary to create a supportive environment for small businesses.

Addressing challenges in credit flow

While acknowledging progress, Mr. Malhotra admitted that challenges remain. Some MSMEs continue to face delays in loan approvals and working capital shortages.

He said the RBI is monitoring credit growth patterns and engaging with banks to ensure that lending to MSMEs remains robust.

Banks have been encouraged to adopt flexible and innovative approaches while maintaining prudent risk management practices.

Emphasis on sustainability

The Governor also highlighted the importance of building a sustainable MSME ecosystem. This includes promoting responsible borrowing and lending practices.

He said that while expanding credit access is important, maintaining asset quality and financial stability is equally critical.

The RBI aims to strike a balance between promoting growth and safeguarding the banking system.

Deputy Governors’ participation

Deputy Governors T. Rabi Sankar, Swaminathan J. and S.C. Murmu participated actively in the discussions.

They engaged with industry representatives on various operational issues and provided clarity on regulatory guidelines.

Their presence demonstrated the central bank’s collective commitment to strengthening the MSME sector.

Way forward

Concluding the meeting, Mr. Malhotra reiterated that improving MSME credit access will continue to be a central theme in RBI’s policy framework.

He assured participants that the central bank remains open to suggestions and will continue dialogue with stakeholders.

The RBI will review feedback received during the meeting and consider further steps if necessary.

Broader economic impact

Ensuring smooth credit flow to MSMEs can have far-reaching economic benefits. Increased access to finance can enable businesses to expand production, adopt new technologies and enter new markets.

It can also create employment opportunities and boost export competitiveness.

By strengthening the MSME sector, the RBI aims to support inclusive and sustainable economic growth.

Conclusion

The meeting between the RBI leadership and MSME representatives highlights the central bank’s proactive approach.

Governor Sanjay Malhotra’s emphasis on timely and adequate formal credit reflects the importance attached to the sector.

With coordinated efforts between the RBI and the Government, along with continued stakeholder engagement, the path ahead aims to create a more supportive financial ecosystem for MSMEs.

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