Digital credit push for micro firms as govt asks banks to step up lending | Economy & Policy News

 The government has asked banks to step up digital lending to micro businesses and expand access to credit lines through the Unified Payments Interface (UPI). The move is aimed at making working capital easier to access for small businesses while reducing dependence on traditional loan processes.

Department of Financial Services (DFS) Secretary Sanjay Lohiya made the push at a review meeting with heads of public sector banks and executive directors of major private sector banks on Tuesday.

Banks told to expand digital lending

Lohiya asked banks to expand their digital outreach and focus on end-to-end digital processing of loans. This means that more parts of the borrowing process, from application to processing and disbursal, should be handled digitally.

The government also urged private sector banks to increase their participation in financial inclusion schemes.

Boosting UPI-based credit

A key part of the discussion was the use of digital credit channels to provide working capital to micro enterprises. The government highlighted:

• Credit lines on UPI, which can provide businesses with a digital route to access working capital
• Credit Cards for Micro-Enterprises (CCME), which can also be used to meet business funding needs

These channels could help micro businesses access credit through digital banking infrastructure, while reducing their dependence on lengthy, branch-based processes.

Financial inclusion gets a wider push

The review also focused on improving access to government-backed insurance and pension schemes. Banks were asked to create greater awareness about claim eligibility under the Jan Suraksha insurance schemes and to handle claim-related grievances carefully.

The government also directed banks to enrol all new beneficiaries of the Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana through the Jan Suraksha portal. The portal is being integrated with banks and insurers, which the Finance Ministry said would improve data quality and ease of operations.

The digital lending push comes ahead of a Financial Inclusion saturation campaign scheduled from October 21 to December 31. Banks have been asked to participate actively, with greater attention to marginalised sections and their banking needs.