MSME eLending in for a gold rush

Digital lending to MSMEs in India has the potential to grow nearly as large as the entire global microfinance industry as it stands today by 2023, as per a report by Omidyar Network and the Boston Consulting Group. Here are some of the findings from the report:

A survey of 1,500 MSME owners with annual business revenue between Rs 3 lakh and Rs 75 crore highlighted challenges for MSMEs in growing their business due to lack of formal credit, and showed a large opportunity for digital lenders.

MSME digital lending has the potential to increase between 10 and 15 fold by 2023 to reach Rs 6-7 Lakh crore ($80-100 billion) in annual disbursements, nearly as much as the $114 billion loan portfolio of the global microfinance industry.

Survey takes
The survey also shows that nearly half of MSMEs in India would use WhatsApp payments once it is fully rolled out across the country. WhatsApp Pay was rolled out in the beta stage earlier this year, and the company recently dropped the ‘beta’ tag from its payment policies.

While the Omidyar and BCG report focused on credit challenges for MSMEs and the opportunity for digital lending, the survey of over 1500 MSMEs also brought out the degree of digital adoption by this sector, which numbers about 60 million.