Reportedly the backbone of India's economy, small businesses will take long to recover, the World bank has zeroed in on the sector with a $750 million emergency response program and is working with the government on building a platform for MSMEs to get financiers to take on raised invoices cutting through the delay that MSMEs face in receiving payments
India's MSME sector forms the life-blood of India's economy; contributing to 30 per cent of India's GDP and 40 per cent of exports. After a slew of interventions by the World bank targeted towards health and migrant labor post-Covid in India; the bank approved a $750 mn MSME Emergency Response program to support increased flow of finance into the hands of micro, small and medium enterprises.
The bank identified massive liquidity issues hurting the MSME sector and constraints in the flow of finance from banks and NBFCs to the MSMEs as some of the main issues that need to be resolved to enable the MSMEs to participate in the recovery of the business cycle. The program states the bank, will channel liquidity by de-risking lending through a range of instruments. According to World bank data only about 8 per cent of MSMEs are supported by formal credit channels. And the program will incentivize and mainstream the use of fintech and wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital financial services in MSME lending and payments. The $750 million loan has a maturity of 19 years including a 5-year grace period.
