MSMEs still prefer traditional lending, says report
Bangalore, Nov 20 (KNN) The Micro, Small and Medium Enterprises (MSMEs) still prefer traditional lending over digital mode, according to a report.
According to the second edition of the Indian MSME Impact Report 2019 which was launched by Instamojo, an online platform for MSME, as many as 49% of Indian MSMEs still prefer traditional lending channels over digital.
Around 75% of MSME respondents believe that technology helps solve many of the challenges they face, the report says adding that small enterprises leverage online information, logistics and e-mail apps, social media, task management solutions and also train employees on technology.
The report states that around 9.2 million MSMEs registered under GST could be a potential market for advanced offerings from fintech companies. These advanced offerings could include business analytics tools.
The study further revealed a high level of MSME user satisfaction in digital payment technology.
''Nearly, three-fourths of the respondents were very satisfied with their experience of digital payment products, while more than half of the MSMEs who responded to the survey considered payment gateway solutions to be very valuable,'' the report said.
Transactional convenience and monetary incentives to customers create value for about two-thirds of the MSMEs surveyed, while another 20% see value being created from customer preference for digital payment technology, data security and synchronization.
The report also states that Indian MSMEs face several critical business challenges such as credit deficit, unskilled labour, complexity of taxation and knowledge asymmetry. Among those who use digital payment solutions, around 47% of the MSMEs are able to manage only a few of the critical challenges, while 20% are overwhelmed by some of the challenges.
Around 25-30% of the respondents who are able to manage these challenges have learnt new technologies or sought help from experts, the report states.