Should ME-Card Rollout be Streamlined and PSL Cap Raised to Rs 1 Crore?
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Synopsis
In a recent meeting, PHDCCI urged RBI to expedite the rollout of ME-Cards and raise the PSL cap to Rs 1 crore, aiming to enhance credit access for MSMEs and improve financial efficiency in India.
Key Takeaways
- ME-Cards are essential for microenterprises.
- Increasing PSL cap to Rs 1 crore could enhance credit access.
- Faster cheque clearance can improve MSME cash flow.
- Standardisation of banking procedures is necessary.
- Digitisation can reduce paperwork and boost transparency.
New Delhi, July 28 (NationPress) The PHD Chamber of Commerce and Industry (PHDCCI) held discussions with the Reserve Bank of India Governor, Sanjay Malhotra, on Monday, advocating for the swift implementation of the Micro Credit Facility Cards (ME-Cards) that were mentioned in the Union Budget.
These ME-Cards are designed as digital, custom credit solutions specifically aimed at microenterprises registered on the Udyam portal, with each card offering a credit limit of up to Rs 5 lakh.
The industry chamber proposed that the Priority Sector Lending (PSL) cap for loans through NBFCs should be raised significantly from the current Rs 20 lakh to Rs 1 crore.
Additionally, PHDCCI suggested that the interest equalisation scheme be expanded to encompass service exporters, as manufacturers currently benefit from subsidies on interest rates for pre-shipment and post-shipment export credits.
They also called for a faster clearance process for cheques deposited by MSMEs, aiming for a 24-48 hour credit window.
The chamber recommended renaming the ME-Cards to differentiate them from regular consumer credit cards and advocated for standardised issuance procedures, interest rate caps, and the establishment of a centralised portal for tracking card applications.
These proposals aim to improve credit accessibility, regulatory support, and financial efficiency for India's Micro, Small, and Medium Enterprises (MSMEs). The Chamber praised the government's initiative to broaden credit guarantee schemes for MSMEs and urged the RBI to ensure effective execution.
PHDCCI requested the RBI to set up dedicated help desks at field offices to assist MSMEs dealing with credit access issues.
Furthermore, the industry chamber highlighted the necessity of digitising and standardising banking documents across institutions to minimize paperwork and enhance transparency.
Other recommendations included regulatory actions against unfair practices by credit rating agencies and a reevaluation of NPA classification standards, proposing an extension of the overdue threshold from 90 to 180 days to better align with realistic MSME working capital cycles.
Point of View
The PHDCCI's recommendations for expediting the ME-Card rollout and increasing the PSL cap reflect a proactive approach to supporting India's microenterprises. The emphasis on regulatory improvements and digitization aligns with the broader national goal of fostering economic growth through enhanced access to credit.
NationPress
30/07/2025
Frequently Asked Questions
What are ME-Cards?
ME-Cards are digital credit products designed for microenterprises registered on the Udyam portal, with a credit limit of up to Rs 5 lakh.
Why is the PSL cap important?
The PSL cap determines the maximum loan amount that can be classified under priority sector lending, which significantly affects credit availability for MSMEs.
What changes did PHDCCI propose regarding interest rates?
PHDCCI suggested extending the interest equalisation scheme to service exporters and ensuring interest rate caps for ME-Cards.
How will faster cheque clearance benefit MSMEs?
Faster cheque clearance within a 24-48 hour window will improve cash flow for MSMEs, allowing them to operate more efficiently.
What is the significance of digitising banking documents?
Digitising banking documentation will reduce physical paperwork, enhance transparency, and streamline processes for MSMEs.
