Fostering financial inclusion and bridging credit gap for micro enterprises

Posted under: MSME
Date: 2023-12-12
Fostering financial inclusion and bridging credit gap for micro enterprises

According to IBEF, not many are aware that about 99% of the 63 million MSMEs are micro-MSMEs, while only 0.52% are classified as small MSMEs and a meager 0.01% are classified as medium MSMEs. Further, the majority of micro-MSMEs remain in the informal sector, operating without proper registration of their businesses. The lack of formalization has exacerbated the credit gap because formal credit can only be accessed by registered MSMEs. For MSMEs to reach 50% GDP contribution as part of India’s economic growth arc, the focal point must be on supporting the micro MSMEs to make a quantum leap forward so that more of them can graduate to the small MSME tier. There are three vital points of concern that must be addressed to ameliorate the last-mile financial inclusion of MSMEs, with technology simplifying many aspects. 1. Stop using property collateral for business loans. 2. Eliminate human bias in loan decision-making. 3. Speed up the process.

Read more at: yourstory.com