test the credit scoring situation in us estimated that the cost of evaluating micro loan applications in the us using credit scoring was reduced to around $ 100 compared to a range of $ 500 – $ 1800 prior to the introduction of credit scoring. the time saving involved meant that banks could focus more time on marginal applications, existing loans that are showing signs of distress and processing more loan applications. use bis central bankers ’ speeches of credit scoring has also meant that the marginal benefits of taking and maintaining collateral are not justified for small loans. 16. the bank of england has also acknowledged that there is some evidence of banks being more willing to lend on an unsecured basis when using credit scoring, which potentially improves the access to bank finance for very small and start - up small and medium enterprises. for the borrower, the benefits from credit scoring include increased access to credit and, in some cases, lower borrowing costs. in its study of sme credit scoring ’ s impact on access to credit, the federal reserve bank ( frb ) of atlanta found that, in general, the use of credit scoring increased the amount of credit banks extended to the small and medium enterprises. it found that banks using scoring were more likely to lend to the small and medium enterprises that lacked sufficient financial information for approval through traditional underwriting methods. presumably, this is due to the inclusion of the business owner ’ s personal information in the scoring process. the study also found that banks using scoring were more likely to lend in low - income areas, a fact it attributed to greater objectivity in the underwriting process. 17. while credit scoring would definitely improve the speed and efficiency in sme lending, banks need to ensure effective follow up and monitoring of the msme accounts. we should be careful to ensure that credit standards do not become lax so that lenders are willing to provide credit to more distant borrowers without conducting the appropriate due diligence or monitoring. ultimately while models do help there is no substitute for the commercial judgement of the seasoned hardnosed banker which also must be applied! f. way forward in bridging the gap in msme financing 18. access to finance needs to be enlarged through alternative sources of capital such as private equity, venture capital and angel funds. this is crucial for facilitating the growth of knowledge based enterprises which have high potential in indian context. they would require such alternative sources of finance since traditional channels may not meet their needs. apart from fiscal incentives for promoting such alternative sources of capital ( such as

swaminathan j : catalysing inclusive growth - strengthening partnerships for reaching the last mile keynote address by mr swaminathan j, deputy governor of the reserve bank of india, at the conference for lead district managers of maharashtra held in tadoba, chandrapur, maharashtra, 30 november 2024. * * * regional director for mumbai regional office, shri suman ray ; regional director for nagpur regional office, shri sachin shende ; chief general manager, national bank for agriculture and rural development, ms. rashmi darad ; general manager, bank of maharashtra and convenor, slbc maharashtra, shri r d deshmukh ; senior executives from banks, lead district managers ( ldms ), lead district officers ( ldos ) and my colleagues from reserve bank of india, present here. good morning, it is my proud privilege today to be addressing this conference for lead district managers of maharashtra. being here near nagpur and that, too, for a conference of the ldms, it would be amiss of me if i am not reminded of shri baba amte, whose ashram is within a few kilometres. as you all would be aware he was one of the proponents of rural economy - driven growth. there is this one part of a quote attributed to him, which says, " a balanced economic system is one which provides sufficiency for all and superfluity for some - " when you parse the quote, you will realise that the ldms are facilitating the sufficiency of the rural economy. and balancing the economy by facilitating sufficiency for the rural economy rings as much true today as it must have been when it was said. when you look at the results of the economic survey, 2023 - 24, it is observed that indian agriculture sector provides livelihood support to about 42. 3 per cent of the population and has a share of 18. 2 per cent in the country's gdp at current prices. 1 so, with the rural economy thriving, the role of lead banks assumes a renewed emphasis. in fact, the aspirational goals that rbi has set for rbi @ 1002 in a multi - year time frame, reiterates its focus on'accessibility, availability and quality of financial services to all sections of the society '. it is this underlying principle that had conceptualised the lead bank scheme ( lbs ) in 1969. the lead bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the