India's MSME sector has significant lending opportunity with approx. Rs 28 lakh crore credit gap: Report

New Delhi [India], May 6 (ANI): The Micro, Small and Medium Enterprises (MSME) sector in India presents a significant lending opportunity due to a credit gap of approximately Rs 28 lakh crore, according to a recent report by Mavenark.

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The report highlights the sector's growing importance in the Indian economy and the role of policy interventions in boosting credit availability.

"The estimated credit gap in the MSME sector is Rs 28 lakh crore, indicating a substantial lending opportunity," it said

According to the report, the estimated credit gap of Rs 28 lakh crore points to a substantial untapped lending market in the MSME space. As of March 2024, the total size of the MSME lending market across ticket sizes and various player groups stood at around Rs 35 trillion.

In FY2024 alone, MSME credit expanded by 22 per cent, driven by a surge in demand for loans. However, the first half of FY2025 witnessed a slowdown in credit growth to the sector, owing to broader market conditions and regulatory concerns around overleveraging and asset quality.

MSMEs continue to make a significant contribution to India's economy. In FY2022, the sector accounted for 29.2 per cent of India's GDP, and the Government expects this figure to rise to 40-50 per cent by FY2030.

Moreover, MSMEs were responsible for 45.7 per cent of the country's exports in FY2024, underlining their importance in bolstering economic growth and global trade engagement.

To meet the diverse financing needs of MSMEs, banks and non-banking financial companies (NBFCs) offer a variety of credit products such as loans against property, supply chain financing, inventory funding, and unsecured business loans.

These tailored financial solutions continue to serve as critical enablers for MSME operations and expansion

However, the report also mentioned that initiatives at the policy level by the Government of India, the Reserve Bank of India (RBI), and other stakeholders have played a crucial role in enhancing credit access to MSMEs.

It suggested that addressing the credit gap with timely and adequate financing solutions could unlock immense potential in the MSME sector, positioning it as a key engine of growth for India's economy in the coming years. (ANI)

(The story has come from a syndicated feed and has not been edited by the Tribune Staff.)