IREP Credit Capital | Empowering MSMEs Through Credit: A Path to Sustainable Growth

Having spent over three decades in the lending space, I've been privileged to witness the growth and transformation of this vital sector. MSMEs are the backbone of the Indian economy, generating employment and providing essential products and services. They create demand and ensure that supply meets society's needs. Despite their significance, MSMEs face numerous challenges, particularly in accessing credit and financial services.

Challenges Faced by MSMEs:

• Lack of Credit History
• Inadequate Collateral
• Lack of Awareness about Government Schemes
• High-Interest Rates
• Misinformed Financial Products: Many MSME customers are often sold unsuitable products like high-interest schemes or inappropriate credit cards, further complicating their financial management.

These issues significantly restrict MSME growth and limit their economic and societal contributions. Although government initiatives like the Credit Guarantee Scheme and the Udyam Assist Platform aim to support MSMEs, challenges persist, especially for micro and small enterprises in semi-urban and rural areas.

The recent MSME Pulse report by TransUnion CIBIL indicates a 29% year-over-year growth in loan inquiries, highlighting a continued demand for commercial credit. Despite this growth, smaller enterprises still struggle to access these schemes. Nearly 46% of MSME originations come from semi-urban and rural areas, emphasizing the need for more targeted financial solutions.

Government Initiatives for MSME Credit

Several government schemes are designed to support MSMEs in accessing credit:

• Prime Minister’s Employment Generation Programme (PMEGP): A credit-linked subsidy program aimed at generating self-employment.
• Pradhan Mantri Mudra Yojna (PMMY): Provides loans up to ?10 lakhs to non-corporate, non-farm micro/small enterprises.
• Credit Guarantee Scheme: Facilitates credit without collateral and third-party guarantees.
• TReDS: Facilitates financing of MSMEs' trade receivables.
• ECLGS: Announced during the COVID-19 pandemic to fulfill the credit gap in MSMEs.

Addressing the Credit Gap

• With around 68 million MSMEs in India, there is a significant credit gap of ?90 lakh crore in the MSME lending market. At IREP Credit Capital, we are attempting to reduce this industry-wide problem. By adopting innovative lending measures, we aim to ensure that credit is accessible to those who need it most, fostering inclusive growth and economic empowerment. MSMEs are the Growth Engine for India’s economy by contributing 30% of India’s GDP and are set to grow to 50% soon.

Supporting Women Entrepreneurs

We recognize the significant contributions of women entrepreneurs to society and are dedicated to providing them with timely financial assistance. As of December 2022, there were about 63 million credit-active women borrowers in India, with a growth rate of 16%, compared to 13% for men. Women are more likely to reinvest their earnings into their families and communities, amplifying the impact of their entrepreneurial activities.

Our Approach at IREP Credit Capital

We understand the unique challenges faced by MSMEs when seeking loans. We have developed a unique credit assessment methodology and employ best-in-class technology and data analytics to create customized loan solutions for MSMEs. Here is how we are making a difference:

1. Strong Digital Technology: We are adopting robust digital infrastructure to simplify the loan application and approval process, reducing turnaround times.
2. Custom Data-Driven Credit Assessments: Utilizing advanced data analytics, we accurately assess creditworthiness, enabling us to offer loans to MSMEs often overlooked by traditional banking systems.
3. Customized Loans: We provide tailor-made loans to meet the diverse needs of MSMEs, offering the support they require through doorstep services.
4. Customer Centricity: IREP is committed to providing best-in-the-class services through 68+ branches in AP & Telangana with the help of 650+ employees since 2018. We are in the process of serving Karnataka MSME customers by providing secured loans through 25 upcoming branches.
5. Women Entrepreneur: All of IREP’s 12,000+ customer base consists of Women as either the primary or secondary applicant.

Bridging the MSME Credit Gap

This article aims to highlight the persistent credit gap in the MSME space and raise awareness about IREP Credit Capital's efforts to address these issues. Bridging the MSME credit gap is challenging, but with the right combination of technology, data analytics, innovative solutions, and personalized touch for the customers, we can unlock this sector’s full potential.

IREP Credit Capital is committed to providing tech-based PHYGITAL lending services targeting small towns and focusing on the self-employed MSME segment – unbanked, underserved, and NTCs but creditworthy. By offering Secured LAP with high-quality underwriting standards through robust processes, we strive for financial inclusion, social responsiveness, customer delight, and women empowerment. The IREP Secured Business Loan seeks to develop a culture of empowerment and self-dependence, or ATMANIRBHAR, among the MSMEs in these untapped semi-urban and rural segments.

Together, we can build a more inclusive and prosperous future for all. Happy MSME Day!?

Naresh Naik IREP Credit Capital

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