Banking the Unbanked, The Unguarded Territory

As of 2018, there are 46 million MSMEs (Micro, Small, and Medium Enterprises) in India. They belong to the low-income groups of our society, for which no formal credit system is being offered by the banks. However, this sector contributes to 38% of the total GDP and offers 106 million jobs nationwide.

Despite the lauded efforts of the Government's Mudra scheme, a substantial part of this low-income group population fails to fulfill their business aspirations due to a lack of paperwork and adequate collateral to meet the standards of bank borrowing.

So what should be done by key contributors to the global economy? Should we let them continue to fend for themselves and fail to expand their businesses? Or should there be financial inclusion for them so they can become a part of the nation's vision of economic prosperity?

Protagonists of Growth

Estimates from the Ministry of MSMEs reveal that almost 40% of the overall manufacturing exports come from this segment. However, its potential is often untapped by business leaders and banks as they don’t want to invest in them due to the credit risk associated with this group.

Expedient financial impetus to micro and small businesses is, in fact, reconstructing the social and economic fabric of our nation. According to sources from the Government, MSMEs are the backbone of the nation.

Despite the volatility they face in the economic space, they account for 47% of income generation in the nation. That is more than the contributions of the services and industries sectors, which offer 17% and 26%, respectively.

Wheels of Fortune

Capri Global, an NBFC that began operations in 2009, is the hope driver of this sector. Since their inception in 2011, they started lending to MSMEs in 2013 and have lent to more than 9,000 small-scale businesses to date, including over 3,900 businesses last year alone. According to Capri, "We have seen a rippling effect of economic growth from regional, national, to global levels through the timely provision of financial assistance to MSMEs."

A Slice of Progress

One such example of timely credit is that of Prashant Shinde, a hostel owner in Madhya Pradesh, who wanted to expand his business by renovating the hostel for better facilities for boarders.

“It’s very disappointing to get rejected outright by banks for loans due to the lack of credit proof,” shared Prashant.

Capri sanctioned a ₹1.2 million loan to Prashant, enabling him to make the changes to his hostel and also invest part of the loan in his cable services. Capri nurtured and supported Prashant's dream, and he is now running his business successfully, in turn contributing to the nation’s GDP.

Our Mission

At Capri, we are committed to recognizing the milestone-setting efforts of the MSME sector in India by rendering timely delivery of financial aid for them to achieve their business targets and grow exponentially. It is our endeavor to empower the understated yet thriving skill-based manufacturing industry, enabling livelihoods to make a difference in the growth story of our nation.

Steps about Banking the Unbanked

Steps about Banking the Unbanked