In today’s digital age, financial inclusion is becoming more than just a government goal. It is
turning into a powerful reality, especially for Micro, Small, and Medium Enterprises (MSMEs).
These small businesses have always played a key role in the economy, but for a long time,
many of them were left out of the formal financial system.
Thanks to the growth of fintech (short for financial technology), things are starting to change.
MSMEs are now getting access to the financial tools and services they need to grow, survive,
and compete. In this article, we’ll explore what financial inclusion means, how fintech is helping
MSMEs, the challenges that remain, and what the future looks like.
What is Financial Inclusion?
Financial inclusion means giving individuals and businesses, especially those in remote or
underserved areas, access to affordable and useful financial services. These services
include:
● Bank accounts
● Loans and credit
● Payment systems
● Insurance
● Savings options
When small businesses are financially included, they are able to save money, manage risks,
invest in growth, and create jobs. Without financial services, even the most hardworking
business owners can find it hard to grow or survive.
For many years, traditional banks often avoided lending to small businesses. MSMEs were
seen as too risky because they often didn’t have enough documents, collateral, or financial
history. This left many businesses struggling to access loans, credit, or even a basic business
account.
What is Fintech?
Fintech is a word that combines "finance" and "technology." It refers to companies that use
modern tools like mobile apps, software, cloud systems, artificial intelligence (AI), and
online platforms to offer financial services in faster, simpler, and more convenient ways.
Unlike traditional banks, fintech companies are usually more flexible. Their services are:
● Easy to access from a mobile phone or computer
● Available 24/7
● Paperless or with minimal documentation
● Designed for small businesses or first-time users
This makes fintech especially helpful for MSMEs, many of which operate in rural areas or
outside the formal economy.
Why MSMEs Matter – And What Holds Them Back
MSMEs are incredibly important for India’s economy. They:
● Make up over 30% of the GDP
● Employ more than 110 million people
● Are a major part of the manufacturing and export sectors
Despite their importance, many MSMEs face major obstacles, such as:
● Lack of access to loans and credit
● No formal financial history
● High interest rates on loans
● Complex paperwork
● Limited access to banking in rural or small-town areas
These problems limit how much MSMEs can grow. During difficult times, like the COVID-19
pandemic, many of them struggled to survive without proper financial support.
This is where fintech is making a big difference.
How Fintech is Helping MSMEs
Let’s look at the different ways fintech is empowering small businesses across the country:
1. Quick and Easy Business Loans
One of the biggest problems MSMEs face is getting loans. Fintech lenders like LendingKart,
Razorpay Capital, and KreditBee offer instant business loans with:
● Minimal paperwork
● Fast online approval
● No need for collateral (property or other assets)
These platforms use AI-based credit scoring. This means they check things like your GST
data, cash flow, and online sales to decide if you qualify for a loan — not just your credit
history.
This makes it possible for even small or new businesses to get funding.
2. Digital Payments with UPI and Mobile Apps
Thanks to systems like UPI (Unified Payments Interface), MSMEs can now:
● Accept payments instantly from customers
● Avoid using card machines or cash
● Keep records of all transactions for accounting
Apps like PhonePe, Google Pay, Paytm for Business, and BharatPe help shopkeepers,
service providers, and even vendors at local markets to join the digital economy.
This builds a digital footprint, which makes it easier to get loans in the future and run a more
organized business.
3. Digital Accounting and Invoicing Tools
Many small business owners are not experts in accounting or finance. Fintech tools like
Khatabook, Vyapar, and Zoho Books make it easier to:
● Track income and expenses
● Send digital invoices to customers
● Manage inventory
● File GST and other taxes
These tools reduce errors and save time. They also help businesses stay compliant with
government rules — an important step if they want to grow or attract investors.
4. Access to Business and Health Insurance
Many MSMEs don’t have any insurance to protect them from unexpected losses or health
emergencies. Fintech platforms like Digit Insurance and ACKO now offer:
● Affordable and flexible business insurance plans
● Health insurance for workers and owners
● Quick and easy policy setup online
This protects the business in case of events like fire, theft, natural disasters, or medical
emergencies — and gives peace of mind.
5. Financial Education and Planning Tools
Many fintech platforms also provide free or low-cost tools to help business owners make smart
financial choices. These include:
● Credit score checkers
● EMI and loan calculators
● Budgeting apps
● Short educational videos or articles
This helps business owners understand their finances better — even if they have no formal
training.
Challenges Still Ahead
While fintech is helping a lot, some challenges still remain:
● Internet access is still poor in many rural areas
● Digital literacy is low among older business owners
● Cybersecurity and fraud risks are growing
● Some MSMEs still don’t trust digital lenders
To solve this, there needs to be more training, awareness campaigns, and government
support to help MSMEs understand and use fintech safely.
What’s Next? The Future of MSMEs and Fintech
The Indian government is also pushing for more financial inclusion through programs like:
● Digital India Mission
● Startup India
● MUDRA loan schemes
● ONDC (Open Network for Digital Commerce)
These programs, along with fintech innovation, are helping small businesses become part of
the digital economy, improving their access to markets, money, and customers.
Conclusion
Financial inclusion is not just about having a bank account — it’s about having the right tools
to grow a business. Fintech is giving MSMEs what they need to thrive in today’s competitive
world: fast loans, digital payments, smart tools, and better knowledge.
By using simple technology, even small business owners in remote areas can now run their
businesses more professionally and confidently. With the right mix of technology, training,
and support, fintech has the power to turn small dreams into big success stories.
