India’s Micro, Small, and Medium Enterprises (MSMEs) are the heartbeat of our economy. They contribute nearly 30% to India’s GDP, account for about 45% of exports, and employ over 110 million people across urban, semi-urban, and rural India.
Despite their critical role, one of the biggest challenges they face is access to timely and adequate credit — the fuel they need to scale and sustain operations.
The Credit Gap That Holds Them Back
Traditional banks have been the primary source of formal credit, but their processes often don’t align with the realities of small businesses. Many MSMEs:
- Lack extensive financial documentation or formal credit histories
- Cannot provide hard collateral
- Operate in cash-driven markets
- Require fast disbursals to seize seasonal or market opportunities
This has resulted in a significant credit gap — leaving millions of small businesses underserved and unable to fully realize their potential.
How NBFCs Are Changing the Game
Non-Banking Financial Companies (NBFCs) have stepped in to bridge this gap with their agility, accessibility, and customer-centric approach.
Key ways NBFCs are enabling MSME growth:
- Quick Turnaround: Tech-enabled credit assessment allows faster loan approvals and disbursals, often within days.
- Flexible Lending Criteria: NBFCs consider business cash flows, GST data, or transaction history instead of relying solely on collateral.
- Tailored Products: Loans are structured around the unique needs of traders, manufacturers, and service providers — from short-term working capital to equipment finance.
- Deeper Reach: NBFCs often have a strong presence in Tier-2, Tier-3 towns, and rural markets where formal banking access is limited.
This inclusive model is helping thousands of entrepreneurs move from survival to scale — creating local jobs, driving innovation, and building resilient communities.
Impact Story: From Local Kirana to Thriving Enterprise
Consider the story of Manjunath, who runs a small kirana (grocery) store in a Tier-3 town in Tamil Nadu.
Manjunath had steady sales and loyal customers, but her store was often understocked because he didn’t have enough working capital to buy inventory in bulk. Banks turned him away due to lack of collateral and limited credit history.
He then approached an NBFC for an MSME loan. Within a few days, he received a small-ticket working capital loan based on his GST records and daily UPI transaction history.
With that capital, he:
- Stocked up during festive season at wholesale rates
- Expanded her store space
- Added home delivery services using a local delivery partner
Within a year, his revenue grew by 60%, and he hired two local helpers — becoming an employer himself.
This is the kind of transformation that MSME-focused NBFC lending is making possible across India.
The Road Ahead
With the government pushing for financial inclusion, formalization, and digital adoption, the role of NBFCs in the MSME ecosystem will only become stronger. Their ability to blend speed, accessibility, and personal engagement positions them as essential partners in India’s economic growth journey.
At Radian Finserv, we are proud to be part of this transformation — enabling MSMEs to access timely credit, grow sustainably, and unlock their full potential. Visit your nearest Radian Finserv branch or login website to explore MSME loan solutions tailored for your business.
