Can OCEN fill the credit gap to India’s ‘missing middle’?4 min read . Updated: 07 Sep 2020, 02:16 PM IST
- The Open Credit Enablement Network provides the building blocks for a credit marketplace, and could enable easier flow of funds to MSMEs, but we should not expect any quick turnaround in the fortunes of these businesses.
Nearly 65 million micro, small and medium enterprises (MSMEs) contribute 30% of India’s gross domestic product and employ around 110 million people. By virtue of their regional spread and local employment generation, MSMEs not only have a huge potential in creating employment opportunities and positively impact inclusive economic growth but also check migration to urban centres. However, the lack of accessibility to credit has held them back from gaining size and adopting technology. The current MSME credit gap is estimated at around ₹25 trillion. This huge unmet credit demand has led to MSMEs being referred to as the “lost middle" as their requirements fall between small-sized microfinance loans and larger-sized loans from banks.
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