India’s MSMEs face Rs 60 lakh crore credit gap, smaller firms worst-hit: Bain

The latest market report highlights that India's MSMEs face a credit gap of more than Rs 60 lakh crore, with smaller businesses particularly struggling to access formal loans, according to a new Bain & Firm and NPCI Bharat BillPay report.

The report estimates that formal lenders meet only 30-40% of the debt demand from smaller MSMEs. It additionally found that around Rs 8.1 lakh crore owed to MSMEs stays stuck in delayed payments, while finance teams spend 30-40% of their time on reconciliation and matching transactions.

The report, released at the Global Fintech Fest 2026, stated better digital connectivity between businesses, banks, payment platforms and lenders could help improve access to credit and make business transactions more efficient.

"India has progressed substantially on digital payment penetration, yet many B2B workflows spanning business systems, payment providers, banks, financiers and public systems stay largely fragmented. A gap that affects India's businesses and MSMEs," stated Saurabh Trehan, Partner and India Head of Financial Services Practice at Bain & Firm.

"India's next chapter of B2B transformation is not only around moving money faster; it is around making the underlying transaction visible, verifiable, and actionable across the ecosystem," Trehan stated.

Smaller MSMEs face bigger credit gap

The note stated formal credit supply of around Rs 34 lakh crore meets only part of an estimated Rs 92 lakh crore in MSME debt demand.

"Smaller enterprises are disproportionately underserved, with formal channels meeting only 30%-40% of debt demand, translating to an ~INR 60 lakh crore formal gap," the note stated.

The report additionally highlighted the impact of delayed payments on MSMEs. Around Rs 8 lakh crore in delayed MSME receivables is linked to information mismatches, it stated.

Businesses additionally lose significant time dealing with fragmented transaction processes.

"Finance teams spend 30%-40% of their bandwidth on reconciliation and transaction matching, including invoice processing, payment follow-ups and exception handling," the note stated.

Interoperable digital system could improve access to credit

The note stated a central, interoperable digital layer could connect businesses, payment providers, banks and financiers and help digitise the order-to-cash cycle through standardised APIs.

It stated the system could automate reconciliation across more than 20 crore monthly GST e-invoices and turn buyer-confirmed invoices into financeable records.

This could enable cash-flow-based underwriting alongside traditional collateral-based lending, according to the report.

Dr Noopur Chaturvedi, MD & CEO, NBBL, stated, "The future of B2B commerce will be built on interoperability. As businesses increasingly digitize their operations, the ability to connect invoices, payments, reconciliation and financing through a common digital infrastructure is becoming increasingly critical."

"A standardized and connected ecosystem can help transform fragmented business processes into trusted digital journeys, creating value for enterprises of all sizes while improving credit access for underserved MSMEs," she stated.

AI could further improve B2B transactions

The note stated advanced analytics and agentic AI could build on the benefits of a connected digital system.

"Advanced analytics and agentic AI, layered on the rail, can compound these upside further, through cash-flow intelligence, dynamic risk scoring, agentic credit underwriting, and open-market intelligence, with the potential to orchestrate the entire trade lifecycle end to end," it stated.

The note stated India's formal business sector is worth more than Rs 130 lakh crore and contributes around 45% of the country's gross value further noted.

It identified a connected digital ecosystem as one of four key enablers that could help unlock the sector's potential.

"With ecosystem-wide participation, the layer has the potential to become India's B2B operating system, turning fragmented activity into a trusted, connected foundation for the country's next phase of expansion towards Viksit Bharat," the note stated.