How do innovative tech and approaches are expanding access to finance for MSMEs, especially in underserved segments?

Technology has come to play a vital and far-reaching role across industries and also helped fuel their growth, similarly the MSMEs and especially the underserved segment has been able to harness the benefit of technology and gain access to finance. 

Here is how the different stakeholders view the contribution of tech to MSME’s growth:

George Alexander Muthoot, MD, Muthoot Finance said that the gold finance NBFC is opting for innovative technologies to revolutionize credit access to MSMEs. 

Although our MSME customers may require to physically pledge their gold for evaluation, Muthoot Finance’s extensive 5000+ branch network, and a robust phygital infrastructure through Loan@Home initiative facilitate faster approval of loans and disbursements. We also encourage more digital transactions while disbursing gold loans, especially loans of Rs. 20,000 and above. We disburse loans via IMPS or UPI, apart from RTGS/NEFT networks which ensures that their credit history is also strengthened, he added.

Sumit Aggarwal, Head - MSE, Supply Chain & Financial Institutions, Jana Small Finance Bank, on similar lines, noted the vast-scale contribution of MSMEs to the tune of over 30 per cent to the country’s GDP growth. 

We are using the India Digital stack, digital GST and banking data analytics to fulfil the working capital and overall banking needs of MSMEs, he stated.  

Along with technological innovations, government schemes like Productivity Linked Incentive (PLI) and CGTMSE  are providing a boost to help fuel the growth of hitherto underserved MSMEs in manufacturing sectors like renewable energy and agri-processing, which have huge growth potential for India, Aggarwal added.

Arun Nayyar, MD and CEO NeoGrowth underlined that as per NeoGrowth's NeoInsights Report titled 'Business Confidence Study 2024,' 90% of MSMEs are confident about India's economy in 2024. This confidence, driven by strong retail consumption and the adoption of digital payments, positions MSMEs at the core of India's economic development.  

Hardika Shah, Founder and CEO, Kinara Capital believes MSMEs contribute 30% to India’s GDP, but we have the opportunity to take it up to 50% contribution. Easing access to formal credit is a key requirement; there is hardly a dent made to the burgeoning USD $400 billion missing middle credit gap faced by MSMEs in India. Tech-enabled solutions, especially with India Stack, can be the gamechanger at every step of the process - from creditworthiness evaluation, to speeding up the loan process, verification and timely disbursements. 

The company has been rapidlg advancing the use of AI/ML to deliver credit-decisioning that removes human bias from the process for the underserved MSME entrepreneurs.