Digital MSME Lending in India
1. Introduction With the fifth-highest GDP in the world and a thriving business environment, India has one of the fastest-growing economies in the world. MSMEs, or the 55 to 60 million micro, small, and medium-sized businesses currently operating in India, are at the center of this landscape. The contribution of MSMEs to India's GDP is outstanding, but it is approximately 10 percentage points lower than in the US and 23 percentage points lower than in China. Millions of MSMEs need more paperwork to obtain a formal loan. Many need more adequate collateral or have financial information that needs to be more accurate or included. A total of INR 45 L Cr ($600 billion) in MSME credit demand is anticipated for 2018. With interest rates at least twice as high as formal credit, informal credit will meet around 40% of that demand. 2. The Evolving MSME Landscape MSMEs in India are formalizing (becoming businesses with government permits or registrations) and digitizing (adopting...