Only 14% of India’s MSMEs have access to formal credit despite digital finance boom: Deloitte report

The report arrives as India steers its financial sector toward sustaining long‑term economic growth.

Only about 14 % of India’s micro, small and medium enterprises can tap formal credit, even as the nation advances rapidly in digital finance, forcing millions of firms to rely on informal lenders, per Deloitte’s State of Financial Services in India report.

“Just 14 % of MSMEs obtain formal credit, leaving most—especially micro‑enterprises—dependent on informal, high‑cost financing,” the report notes.

It adds that these deficits are “not trivial shortfalls; they signal a pressing need to deepen financial inclusion and foster broader economic expansion.”

Wide gap

According to the Deloitte report, India’s MSME credit gap was estimated at around ₹25 lakh crore as of March 2025. It noted that 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 comes at a time when India is positioning its financial sector to support long-term economic expansion. It noted that India remains one of the world’s fastest-growing major economies and that achieving higher growth will require stronger financial inclusion and better access to credit for underserved businesses.

Despite the credit gap, the report highlighted significant progress in financial access. Around 89 per cent of Indian adults now have a financial account, while the Unified Payments Interface (UPI) processes more than 20 billion transactions every month and accounts for nearly half of global real-time payment volumes.

However, Deloitte cautioned that major gaps remain. About 16 per cent of bank accounts remain inactive, only 15 per cent of adults access formal credit compared with a global average of 24 per cent, and insurance penetration at 3.7 per cent of GDP is roughly half the global average.

Limited inclusion

Calling for renewed policy focus, the report said structural bottlenecks continue to limit financial inclusion.

“The need to scale cash-flow-based MSME lending through AA (Account Aggregator) framework (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),” it said while outlining reforms needed to improve credit delivery.

The report added that addressing these structural challenges by improving credit access, expanding insurance coverage, strengthening financial literacy and narrowing digital access gaps will be critical to ensuring that financial inclusion translates into broader economic participation, financial resilience and sustainable growth.

It said deeper inclusion across semi-urban, rural and underserved segments can also create new demand drivers for the economy while strengthening resilience against external shocks.

Published on June 27, 2026