According to a new Deloitte report, only 14% of India's micro, small and medium enterprises (MSMEs) have access to formal credit products. This comes amid a rapid growth of digital financial services in the country.
Scope of the Problem
Indian MSMEs form the backbone of the economy, providing employment to millions. However, the lack of access to credit hinders their growth. Most businesses are forced to rely on informal funding sources with high interest rates.
Reasons for Low Penetration
Deloitte experts point to several factors: insufficient credit history, difficulties with collateral, and bureaucratic barriers. Even with digital platforms, traditional banks are reluctant to lend to MSMEs.
Possible Solutions
The report suggests using alternative data for credit assessment, such as digital footprints and payments. It also recommends developing fintech partnerships and government support programs.
VirtCardPay's Take
The situation in India is a clear example of how digital technologies have not yet solved the problem of financial access for small businesses. Virtual cards and cryptocurrencies can become tools to bypass traditional barriers, but comprehensive support from regulators and fintech companies is required.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
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