The Impact of Credit Constraints on MSME Performance: Insights from the Financial Ecosystem of Delhi-NCR

Seema Joshi and Bhawna Thakran
Additional contact information
Seema Joshi: Kirori Mal College, University of Delhi, Department of Commerce
Bhawna Thakran: Delhi School of Economics, University of Delhi, Department of Commerce

A chapter in Proceedings of the International Conference on Policies, Processes and Practices for Transforming Underdeveloped Economies into Developed Economies (PPP-UD 2025), 2025, pp 243-255 from Springer

Abstract: Abstract The financial ecosystem for Micro, Small, and Medium Enterprises (MSMEs) in India continues to face barriers that restricts their productivity, sustainability and growth. Despite good banking infrastructure in Delhi–National Capital Region (NCR), credit inaccessibility persists. This study investigates the credit accessibility challenges confronting MSMEs in Delhi-NCR, examining their effects on business performance, employment generation and innovation. Study assesses the role of financial institutions and Information and Communication Technology (ICT) solutions in bridging the credit gap. A mixed-method approach was employed, drawing on secondary data from the Ministry of MSME, National Bank for Agriculture and Rural Development (NABARD) and the Reserve Bank of India, along with national surveys. Descriptive statistics and interpretive analysis were used to examine the structural patterns with contextual realities. Findings reveal that a small proportion of total banking advances in Delhi are directed to MSMEs, even though the sector contributes significantly to India’s Gross Domestic Product (GDP) and employs millions. Further a large majority of non-agricultural enterprises in Delhi operate informally. Government schemes such as Micro Units Development and Refinance Agency (MUDRA) and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) exist to ease collateral barriers, yet their utilization is hampered by low awareness and procedural hurdles. ICT-driven innovations offer potential solutions but face challenges of uneven adoption, digital literacy gaps and cybersecurity risks. The study highlights the urgent need for simplified lending processes, financial and digital literacy interventions and integrated policy frameworks that align traditional banking with fintech innovations to strengthen MSME financial inclusion in Delhi-NCR.

Keywords: MSME; Credit accessibility; Financial institutions; ICT; Digital lending; Financial inclusion; Delhi-NCR (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-894-3_17

Ordering information: This item can be ordered from
http://www.springer.com/9789464638943

DOI: 10.2991/978-94-6463-894-3_17

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().