MSME comprises majorly micro and nanoscale enterprises that are proprietorships. A good share of these enterprises has daily sales upwards of 2,000 rupees only. Their credit need has been around 10,000 to 1 lakh rupees usually. They have always been neglected by the major legal lending institutions as they lack proper documentation and processing these loans is unfeasible for bigger lending institutions. But statistics show that 7.9 million MSMEs contribute 30% to GDP and employ 110million people and as said above 13% of their credit needs are met by formal lending sources and 87% is from informal lending sources for an exorbitant interest rate.
The government has been pushing from its side with many benefiting schemes and financial programs supporting MSMEs. But the gap between loan demand and supply is significant. This is where private players and Fin-tech companies can come in and fill the gap.
About 80% of these MSMEs use smartphones and access the internet. These are more than enough to bring the solution of credit access to MSMEs. With the innovative and collaborative platforms built by Fin-tech companies and employed to use by the lending business the whole process from onboarding the customer to closing the loan has been made quite simple and intelligent enabling a greater flow of credit to MSMEs. The algorithms are employed to make risk analysis and greatly aid the underwriting process, making more loans possible than ever with the least risk.
Also keeping in mind that the customers just can’t purely be left to technology and by themselves, the approach has been phygital which is the right balance of the human and digital approach in serving the loan. Wherever the customer needs in-person assistance and also when assistance can boost the profits of lending like educating and boosting their confidence, the in-person approach is maintained.
The pandemic has bought about a great need for credit in all sectors and majorly MSME. The need has also demanded a new approach. That is exactly where the lending businesses and Fin-tech companies rightly positioned themselves to serve this need. All these factors have greatly contributed to the Rise of MSME lending this fiscal year. Rs 52,800 crore credit expansion happened for MSMEs against Rs 62,000 degrowth for the same period last year. This is just affirming the rise of MSME lending rise.
We at AllCloud have been pushing from our front this rise of MSME lending by providing our customers with the best Unified Lending Technology to assist them to serve loans the best. Our cutting-edge technology brings all the automation of the processes involved in MSME lending onto one platform operating with intelligence from huge data and integration from various organizations to make everything even more secure. To quickly have a demo click here.
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