Page 45 - Banking Finance December 2023

ARTICLE

HARNESSING

TECHNOLOGY FOR

CREDIT

DISPENSATION:

TRANSFORMING

THE UNORGANIZED

SECTOR

S mall business or to be very specific unorganized remain unfunded and a portion of the productive labour
small business is the economic foundation of India.
force would remain unemployed.
It is perhaps one of the largest disaggregated
business ecosystems in the world sustaining around
50 crore lives. The sector comprises of countless of small The unorganized Small Business Sector accounts for a large
share of industrial units. They feed large local and
manufacturing units, shopkeepers, fruits / vegetable international value chains as well as domestic consumer
vendors, truck & taxi operators, food-service units, repair markets as suppliers, manufacturers, contractors,
shops, machine operators, small industries, artisans, food distributors, retailers and service providers. The gross value
processors, street vendors and many others. addition of this sector is 6.28 lakh crore annually.
Mainstreaming these enterprises will not only help in
Formal or institutional architecture has not been able to improving the quality of life of these entrepreneurs but will
reach out to them to meet the financial requirements of also contribute substantially to job creation in the economy
this sector. They are largely self financed or rely on personal thereby achieving higher GDP growth.
networks or moneylenders. Addressing this need will give a
big boost to the economy otherwise this segment would The biggest bottleneck to the growth of entrepreneurship
in the small business is lack of financial support to this sector.
About the author The support from the Banks to this sector is meagre, with
less than 15% of bank credit going to Micro, Small and
Ajay Panday Medium Enterprises (MSMEs). A vast part of the non-
Sr. Manager corporate sector operates as unregistered enterprises. They
Zonal Learning Center
Powai do not maintain proper Books of Accounts and are not
formally covered under taxation areas. Therefore, the banks

40 | 2023 | DECEMBER | BANKING FINANCE