Sector-specific policies must to bridge credit gap for MSMEs: SIDBI

New Delhi: The Small Industries Development Bank of India (Sidbi) has called for sector-specific policy interventions to bridge the credit gap in the micro, small and medium enterprises (MSMEs) sector, while also highlighting the potential of digital lending in addressing the gap.

In a report, Sidbi said the sector has a credit gap of ₹30 lakh crore, with the gap being higher for a few pockets within the sector, such as service and women-owned MSMEs.

The report titled "Understanding Indian MSME Sector: Progress and Challenges" points out that sectors such as readymade garments (RMG), grocery retailers, food processing and IT/ITeS have a higher credit gap and need interventions specifically designed for them.


For the report, Sidbi surveyed 2,097 MSMEs across 19 sectors in manufacturing, services and trading.

The report underscores the high degree of borrowing from informal sources by micro enterprises, which is at 12% compared with small and medium enterprises at 3% and 2%, respectively.

It states that although 90% of the survey respondents have reported accepting digital payment, only 18% have taken advantage of digital lending. Formalisation still poses a challenge, "with 35% of respondents remaining unregistered, reflecting lack of awareness and fear of scrutiny", the report said.