(MENAFN- KNN India)
New Delhi, Jan 8 (KNN)
India's fintech industry leaders are calling for comprehensive measures in the forthcoming budget presentation by Finance Minister Nirmala Sitharaman to improve credit accessibility for Micro, Small, and Medium Enterprises (MSMEs).
Despite recent policy initiatives, particularly post-Covid measures addressing short and medium-term credit requirements, a substantial credit gap persists in the MSME sector.
The sector faces a substantial overall finance demand of approximately USD 1,955 billion, with debt-based finance demand estimated at USD 1,544 billion, according to Reserve Bank of India Deputy Governor Debabrata Patra.
Of the total debt demand, USD 819 billion comes from enterprises seeking formal financing, with banks currently fulfilling USD 289 billion. This leaves a significant untapped market of USD 530 billion for banks, fintech companies, and NBFCs. Industry experts suggest simplifying eligibility criteria for NBFCs under schemes like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to address this gap.
A significant development last year was the introduction of a new clause under Section 43B of the Income Tax Act, targeting the persistent issue of delayed payments. The provision stipulates that buyers can only claim expenses on MSE invoices if payment is made within 45 days of the expense year.
However, according to the government's Samadhaan portal, 40,296 applications involving Rs 12,962 crore in unpaid dues to micro and small enterprises remain pending before various facilitation councils. Since October 2017, the portal has registered 2.18 lakh applications totaling Rs 48,203 crore.
Gaurav Maulikhi, SVP of Business Transformation and Sales Strategy at B2B e-commerce company Solv, emphasises the need for a more robust framework to address delayed payments effectively, despite the introduction of incentivised payment mechanisms.
Currently, CGTMSE provides guarantee coverage of up to 75 percent for MSEs for loans up to Rs 5 crore, with higher coverage for women and SC-ST entrepreneurs.
Jitendra Tanwar, Managing Director & CEO of Namdev Finvest, advocates for improving NBFCs' access to low-cost bank funding and introducing specific advantages for lending in rural and semi-urban areas. He also suggests including sub-Rs 20 lakh secured loans under SARFAESI eligibility to enhance delinquency resolution efficiency.
The fintech sector is also pushing for incentives and subsidies to promote payment and lending solutions, with Airpay founder Kunal Jhunjhunwala emphasising their importance for global expansion and economic self-reliance.
With inflation projected to reach 5.7 percent in Q3 FY 2024-25, addressing operational costs and regulatory complexities remains crucial for strengthening the MSME ecosystem and advancing the Make in India initiative.
(KNN Bureau)
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