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NBFCs facilitate income regulation of MSMEs, help in shaping economy : Vivek Tiwari, CEO, Satya MicroCapital Ltd

The coming years will see more innovation in NBFCs with investments in the digital technologies, which will help MSMEs operate better. There is a lot of potential in the Micro, Small and Medium enterprises, which are the backbone of the economy and contribute a major chunk to the GDP, almost 9%. Moreover, MSMEs are contributing more than 45 per cent of total manufacturing output and more than 40 per cent of total exports of the country, employing 11 crore people and 1 crore new jobs in the next four to five years. But, it is the lack of funds that keeps these MSME's out of the traditional lending landscape. It is due to this that the enterprises are financially excluded at a majority. However, MSME's flourish when the NBFC's become the shock absorbers for these credit deficit enterprises.


In an exclusive interview with Zee Business Online, Vivek Tiwari, CEO of Satya MicroCapital Ltd. states the potential that MSMEs have and the key role that the NBFCs have in enhancing the said potential. Here are the edited excerpts of the interview, Q. How the challenges faced by MSMEs are also opportunities for NBFCs? At present, MSMEs continue to struggle due to several traditional banking challenges such as extensive documentation, insufficient loan sizes, long processing times, lack of transparency in timelines, among others, ending up taking loans from informal sources at much higher interest rates. In fact, 99 per cent of the formal MSME lending happens through NBFCs and incumbent banks, where most transactions are non-digital. This creates a huge