Disrupting Credit in MSME Lending

Abstract

India has total 6.38 crore MSME units which contributes around 30% towards GDP 40% towards total exports. MSME accounts for only 25% of formal credit i.e. 25 lakh crore out of 101 lakh core. Out of total 45 lakh crore MSME credit demand, there has been a credit gap of 20 lakh crore. Out of the total 6.34 crore MSME in country, only 8% of MSME are served through formal credit channels and rest are not served due to lack of documentation, parallel economy, and under reported financials. All the non-bank lenders who desires to capitalize this opportunity are more likely to succeed in providing loans to MSME. Mostly all of the firms tries and lends to only those segment who are already served and are privileged to get the loan easily. But there has been great untapped, unexplored and underserved geographies who do not have any formal access to credit and hence this segment should be targeted since there has been less competition and people over here do not get loans even after so much efforts. In order to enter in this segment, any company should analyze the strategy of market leaders in MSME segment which are HDFC bank, Kotak Bank, Bajaj Finance, Tata Capital etc. In order to determine the method that should be used for study, various credible data source should be used and various interviews are needed to be taken with key stakeholders. In a country like India where majority of people belong to untapped, unexplored and undeserved geographies it has become a great scope for each and every company to enter and gain its market share and build its reputation before other competitors jump over in it.