Providing Capital and Credit To The Indian MSME Sector


India’s micro, small and medium enterprises (MSME) sector is expected to rebound with a 15% to 17% growth in revenues for the financial year ending 2022 amid the country’s economic recovery and an increase in consumer demand. The report, titled, ‘MSMEs back to the grind’, is jointly conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) with CRISIL. “Amidst the global pandemic, India has found its innate strength to brave the storm and focus on developing its domestic ecosystem, to support both the Indian and the global markets,” said Mr Deepak Sood, Secretary General, ASSOCHAM.

KPIs for Indian MSME Sector: 

  1. Smartphone penetration – 54% in 2020. Expected to reach 96% by 2040 
  1. Internet penetration – 41% in 2019 
  1. Increasing social media usage – above 50% in 2020, expected to reach 67% by 2025 – social media increases customer awareness and acts as a platform for digital advertising for MSMEs 
  1. Increasing UPI transactions 
  • 15 Cr. active monthly users. 
  • In May 2022, almost 600 Cr. transactions worth almost INR 10.4 Lakh Crores were done. 
  • 43% of all UPI transactions by volume and 20% by value were P2M in May 2022. 
  1. Shift to digital infrastructure 
  • There were a total of 7.5 Cr. credit cards and 92 Cr. debit cards in India in April 2022 
  1. Digital lending – new platforms coming to target semi-urban/rural MSMEs 

Money Transfer Flow:

RBI → Banks → NBFCs → Startups → Customers

  1. As we move forward, the interest rate/cost of capital keeps on increasing, as each financial intermediary is taking its own cut in between.
  2. Rather than directly giving out loans, banks forward the money to NBFCs/startups which offer comparatively riskier loans with less credit data availability.
  3. If banks themselves have the data with them, they would directly lend to customers at a much lower interest rate, hence making it easier to finance the loans. Hence the adoption of digital services in businesses is very important.


Average MSMEs debt demand is INR 69.3 Trillion every year, growing at 11.5%+ CAGR for the 63.4 M MSMEs in India. Different business models like Supply Chain Financing (or Invoice Discounting), Revenue Based Financing, P2P Lending, Digital Bookkeeping and Accounting Software have gained traction in India in recent years. 

Some emerging players as per their business models: 

Sector Name Founded Year Overview Total Funding (in Million USD) Company Stage Annual Revenue (in Million USD) Latest Valuation (in Million USD) 
BC Agents / Agent based payment solutions Sub-K 2010 Agent-based payment solutions to marginalized sections 13.01 Series C 16.85 74.63 
RapiPay 2009 Agent-based payment solutions for businesses 24.00 Acquired 24.10 73.72 
Eko 2006 Software for correspondent bankers 8.57 Series A 15.20 20.40 
Roinet 2012 Agent-based payment solutions 2.20 Seed 14.48 14.82 
Corporate Card EnKash 2016 Corporate spend management and cards fintech 23.50 Series B 3.51 84.07 
Karbon 2019 Corporate cards and banking solutions for businesses 32.00 Series A 0.05  
Invoice Discounting KredX 2015 Integrated cash flow solution provider 33.03 Series B 2.47 155.89 
Vayana Network 2009 Online trade financing platform 61.58 Series C 3.84 142.91 
P2P Lending + Marketplace Lending Indifi 2015 Online platform for business loans 62.06 Series D 8.71 110.16 
Ziploan 2015 App-based lending platform for business loans 19.09 Series B 5.44 48.96 
Reolving Line of Credit Capital Float 2013 Online platform for consumer & business loans 203.93 Series D 19.50 197.62 
GetVantage 2019 Online platform for revenue-based financing 5.52 Seed 0.06 10.00 
Working Capital Loans Veritas Finance 2015 Provider of working capital loans for small businesses 184.68 Series F 34.16 544.71 

Funding by Sector: 

 Funding in 2021 (in USD Million) 
Sector Seed Stage Early Stage Late Stage Total 
Supply Chain Financing 1.8 33 38.1 72.9 
Working Capital Loans – 25.1 832 857.1 
POS Financing 18 56.4 105 179.4 
Agent based payment solutions 0.5 13.2 9.52 23.22 
Term Loans 3.32 – 145 148.32 
P2P Lending 6.22 10 40 56.22 
Revenue Based Financing 20.3 20 – 40.3 

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