Alternate lending platforms are fixing India’s financial inclusion problem, becoming enablers for SME funding
By Alok Mittal
On June 27th, the world celebrated UN Micro, Small, and Medium Enterprises (MSME) day for the first time to pay its respects to the small companies that are the backbone of most economies worldwide, especially in the developing world. On the occasion, the international body identified access to finance as one of the primary obstacles to MSME growth. Of the 200 to 245 million and informal enterprises that need credit but can’t avail it, more than 90% are MSMEs. Many of these MSMEs are likely to be Indian, given that India’s 51 million MSMEs are facing a credit shortfall of an astonishing $400 billion.
The Indian government has been trying hard to mobilize credit and funding for this critical sector of the nation’s economy, but has found conventional and legacy banks to not be up to the task. Today, India’s MSMEs and their business owners are finding new-age digital startups and alternate lending platforms to be the most effective institution to disperse credit.