MSME businesses are the backbone of the Indian economy. Majority of
the businesses operating within the MSME sector have a lot of demand
for capital to run their businesses. It is very important for these MSMEs
to have access to capital at the right moment when they have a need for
it. The MSME businesses make use of this capital to maintain the factory
costs and other essential expenses in order to run the business smoothly.
The Government of India is very keen about the approach they have taken
in order to figure out the financial element of the welfare of the MSMEs.
Many of the financial schemes have been launched by the Ministry of MSME
for the welfare of the MSMEs. There is a primary need for loan disbursement
this fiscal in order to meet the requirements of the MSMEs. The MSME loan
interest rate is low for businesses from this sector.
Seeds fincap Pvt Ltd. is a Delhi NCR-based non-deposit-taking NBFC.
With its headquarters in Gurugram (erstwhile ‘Gurgaon), we aim to
serve a million MSMEs – Micro, Small, and Medium Enterprises in India
in this decade! It is evident from many recent reports & surveys of
industry bodies and research agencies that MSMEs have huge potential
for the development and growth of the country by creating jobs and
contributing to GDP growth by nourishing entrepreneurship. SMEs are
responsible for over 28% of the GDP and almost 45% of the manufacturing
units.
NBFC startup seeds fincap have recently completed loan disbursement
of Rs. 100 Cr and aims to reach Rs. 250 Cr in the current fiscal. To fund
its expansion plans, Gurugram-based Seeds said it has raised debt from
financial institutions, such as UC Inclusive Credit Pvt Ltd (UCIC), InCred
Financial services limited, Ananya, Northern Arc, AU small finance bank
and others. It plans to raise further funding in debt as it currently has 20
lending partners. It is observed that post the loan disbursement of Rs. 100
Cr, the next target is Rs. 250 Cr loan disbursement this fiscal
year.
There are around 6.3 crore MSMEs in the country that are the second
largest employer in India after agriculture, with over 99% categorized as
small units. As per reports from the RBI, nearly 111 million people are
involved directly in MSMEs and earning their livelihoods. The sector is
responsible for more than 28% of GDP and almost 45% of industrial
production. MSMEs are the engine of growth for the country, but we
need to fuel the engine by providing sufficient financing because,
without adequate finances, they cannot acquire or absorb new
technologies, expand, or compete in global markets, or even build
business relationships with larger firms.
RBI is the largest financial institution in the country that Govern the
financial activities of the major banks. It is important to note that about
a 5th of MSMEs credit requirements are met by banks and the
remainder of the credit comes from other informal sources. It is a well
known fact the MSME businesses often raise capital from their family
and friends during their early stages of setup and sometimes from the
local moneylenders in order to meet their credit requirements to run
their businesses. It is important to note that a large portion of their
credit needs remain unfulfilled. This is the primary reason that hampers
the growth potential of the MSMEs.
There is a huge gap for lending services within the country that can help
the further development of the MSMEs. Lending is one of the primary
activity but the major focus will be to help the underserved
entrepreneurs across the country with additional focus on people living
in tier 2, 3 & 4 cities. There is a huge level of financial exclusion in
the rural population of India due to the lack of financial awareness.
They have very less access to formal finance because of limited or no
knowledge of the availability of easy loans without the need for
collateral. The rural population is underserved due to operational
reasons like limited financial service providers.
For more information: https://smeventure.com/huge-demand-squeeze-for-msme-exporters-in-global-markets/
Customers who are workers, youngsters, and small entrepreneurs who
do not have access to formal credit result in curtailment of growth or
outright winding up of the businesses. It is very important to reach this
segment of the market. The MSME loan interest rates are relatively low
for these market participants. There needs to various flexible approaches
for them to get loan approvals at times of need. The lending company
serving these types of MSMEs must be transparent with all of their terms
and conditions and the policies that they are offering their clients.
It is also important to tie up with local partners in order to reach out
the potential MSME clients and to deliver the services to them. Many of
the financial services company operating in the MSME sector have started
campaigns to raise awareness about the financial options available for
the businesses. Local authorities need to work in collaboration with such
entities in order to make sure that there is no foul play going on under
the table.
Do watch: https://www.youtube.com/shorts/DsawkXKoGGo
MSME businesses are the future of a country like India where the
demand for the products and services are at an all time high. Any
quality business producing high quality stuff will be adequately
rewarded in the long run. It is very important for all the MSME
participants to make a note about the financial schemes and businesses
that are helpful for the MSMEs. Once the basic issue of financial lending
is sorted it will be a smooth path ahead for all the MSMEs to function
efficiently and deliver their products optimally. It is also important for the
MSMEs to make sure that the financial terms and conditions are met
appropriately so that there is renewed relationship with the financial
partners for the long run. If the MSMEs manage their finances, there is
no force stopping them from becoming mega corporations
someday.