Credit Disrupted: Digital MSME Lending in India

Saurabh Tripathi Amit Kumar Manoj Ramachandran Nivedita Balaji Pritish Gupta Anuradha Ramachandran Stella Klemperer Nilesh Agarwal

India’s 60 million micro, small and medium enterprises (MSMEs) make an enormous contribution both to India’s employment and its gross domestic product (GDP). However, India has yet to reach its potential, lagging 10 percentage points behind the US and 23 points behind China in GDP contribution.

The report talks about how digital lending to MSMEs in India has significant potential to disrupt the status quo in financial services. Digital lending to MSME's is projected to increase between 10 and 15 times by 2023, to between 6 and 7 Lakh Crore ($80-100 billion) in annual disbursements. Combined with a largely level playing field in India, without dominant incumbents, a range of entrants and business models can be successful in tapping that market.