A joint study by Omidyar Network and Boston Consulting Group (BCG) has reported that digital lending to micro, small and medium enterprises (MSME) in India can grow upto 7 lakh crore by 2023, a 15x increase in annual disbursements.
“As of 2018, most of the credit demand for $600 billion is being met through informal sources,” said Roopa Kudva, partner and managing director, India at Omidyar Network.
“Digital lending has the potential to propel the productivity of India’s MSMEs, disrupt the status quo in financial services, and offer a meaningful market opportunity for both innovative startups as well as traditional lenders,” he added.
India’s 60 million MSMEs – businesses with annual revenue up to Rs. 250 crore (approximately $35 million) –make an enormous contribution both to India’s employment and its gross domestic product (GDP). Yet, they do so at levels far below that of other large nations, lagging 10%age points behind the US and 23 points behind China in GDP contribution.
The report says, the is on account of three shifts in the market: First, government policies since 2016, including the Unified Payments Interface (UPI) launch and the 2017 Goods and Services Tax (GST), all have led significant numbers of MSMEs to formalize and digitize their businesses.