Only 14% of India's micro, small, and medium enterprises (MSMEs) have access to formal credit, according to Deloitte's latest State of Financial Services in India report. The vast majority of these enterprises, particularly micro-enterprises, remain dependent on informal and expensive sources of funding, the report found.
"Only 14% of Micro, Small and Medium Enterprises (MSME) have access to formal credit, leaving the majority of these enterprises (mostly micro-enterprises) dependent on informal, usurious financing." The report added that these are "not marginal shortfalls -- they are fundamental indicators of the critical need for deepening financial inclusion, and achieving broader economic growth."
The Credit Gap
According to Deloitte, India's MSME credit gap stood at around Rs 25 lakh crore as of March 2025. Based on the sector's contribution to GDP and a healthy credit-to-GDP ratio, the formal credit gap could be "well over INR 50 lakh crore," the report estimated. This shortfall represents a significant barrier to growth for a sector that is central to India's economic expansion.
| Metric | India | Global Average |
|---|---|---|
| Adults with financial account | 89% | Not specified |
| Adults accessing formal credit | 15% | 24% |
| Insurance penetration (% of GDP) | 3.7% | ~7.4% (approx. double) |
| Inactive bank accounts | 16% | Not specified |
| UPI monthly transactions | >20 billion | Nearly half of global real-time payment volumes |
Digital Finance Growth vs. Inclusion Gaps
India's digital payments ecosystem is among the world's most advanced. The Unified Payments Interface (UPI) processes more than 20 billion transactions every month and accounts for nearly half of global real-time payment volumes, the report noted. Around 89% of Indian adults now have a financial account. However, inclusion gaps remain stark: 16% of bank accounts are inactive, and only 15% of adults access formal credit compared to a global average of 24%. Insurance penetration stands at just 3.7% of GDP, roughly half the global average, according to news agency ANI.
Policy Recommendations and Trade Finance Implications
Deloitte called for policy reforms to scale cash-flow-based MSME lending through the Account Aggregator (AA) framework. The report outlined that "Credit should and can become ridiculously cheap and easy for every small business owner - the small supplier, the shopkeeper, the contractor, the artisan and various others." Improving credit availability, expanding insurance coverage, strengthening financial literacy, and reducing digital access gaps are essential to ensure financial inclusion translates into wider economic participation and resilience.
For finance executives and trade finance professionals, the findings underscore a massive unmet demand for working capital and supply chain finance in India's MSME sector. The digital infrastructure—particularly UPI and the AA framework—provides a platform for innovative, lower-cost lending models that could reduce the cost of capital for small exporters and domestic suppliers. Deloitte noted that deeper financial inclusion across semi-urban, rural, and underserved regions could create new demand drivers for the economy while improving resilience against external shocks. Treasury professionals tracking India's credit markets should monitor policy developments around the AA framework, as they directly affect the scalability of trade finance solutions for the country's fragmented MSME base.
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