Expanding Data Collection to Streamline MSME (Micro, Small and Medium Enterprise) Lending

By Vivek Belgavi, Avneesh Narang, and Arvind Raj


Micro, Small and Medium Enterprises (MSMEs) are an integral cog of the growth engine of different global economies. In India in 2018, MSMEs employed 40% of the workforce, contributed 37% of GDP and 43% of exports. [1] In spite of exclusive legislations and policies, lack of access to formal credit has hampered MSMEs from realizing their full potential. For lenders, the fragmented and opaque nature of available MSME information poses serious challenges in underwriting. This policy brief proposes a policy framework for establishing databanks intended to further facilitate the use of alternative data in the MSME lending landscape.