Banking The Unbanked
The unguarded territory
As of 2018, there are 46 million MSMEs (Micro, small and medium enterprises) in India. They belong to the low-income groups of our society for which there is no formal credit system being offered by the banks. However, this sector contributes to 38% of the total GDP and offers 106 million jobs nationwide.
Despite the lauded efforts of the Government’s Mudra scheme, a substantial part of this low-income group population fail to fulfil their business aspirations due to lack of paperwork and adequate collaterals to meet the standards of bank borrowing.
So what should be done by key contributors to the global economy? Should we let them continue to fend for themselves and fail to expand their businesses? Or should there be financial inclusion for them so they can become a part of the nation’s vision of economic prosperity.?
Protagonists of growth
Estimates of the Ministry of MSMEs say that almost 40% of the overall manufacturing exports come from this segment. However, its potential is often untapped by business leaders and banks as they don’t want to invest in them due to credit risk associated with this group.
Expedient financial impetus to micro and small businesses are, in fact, reconstructing the social and economic fabric of our nation. According to sources from the Governemnt, “MSMEs are the backbone of the nation.” Despite the volatility they face in the eco space, they accord for 47% of income generation in the nation. That is more than the services and industries’ contribution which offer 17% and 26% respectively.
Wheels of fortune
Capri Global, an NBFC that began operations in 2009 is the hope driver of this sector. Since their inception in 2011, they started lending to MSME’s in 2013 and have lent to more than 9000 small scale businesses to date. with over 3900 businesses alone last year. According to Capri, “We have seen a rippling effect of economic growth from regional, national to global levels by timely consumption of financial help to the MSMEs.”
A slice of progress
One such example of timely credit is of Prashant Shinde, a hostel owner in MP who wanted to expand his business by renovating the hostel for better facilities to boarders. “It’s very disappointing to get rejected outright by banks for loans because of failure of credit proof trade for money. “
Capri sanctioned a 1.2 million loan to Prashant so he could make the changes to his hostel and also invest a part of the loan in his cable services. Capri nurtured and supported Prashant’s dream and he is now running his business successfully and in turn, contributing to the nation’s GDP.
We, at Capri are committed to recognizing milestone setting efforts by the MSME sector of India by rendering timely delivery of financial aid for them to achieve their business targets and grow exponentially. It is our endeavor to empower the understated but thriving skill based manufacturing industry, enabling livelihoods to make a difference in the growth story of our nation.