Technical Note Series – Missing Middle Enterprise Finance

The micro, small and medium enterprises (MSMEs) sector contributes significantly to the   manufacturing output, employment and exports of the country and the sector is estimated to employ around 60.0 million individuals in over 26.1 million enterprises throughout the country.

Almost 94% of enterprises are into missing middle segment where credit requirement varies from INR 50,000 TO INR 10, 00,000. Largely this missing middle segment has not been served by banking industry and it is little beyond the capacity of urban cooperative banks, Regional rural banks and MFIs.

Considering the importance of missing middle enterprise segment, MSME Umbrella Programme of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH India is implementing an intensive programme on “Missing Middle Enterprise Finance” with Small Industries Development Bank of India (SIDBI). Programme interventions in this area have also been recognized in G20 summit and GIZ – SIDBI is working towards capacity building of financial institutions in India to up-scale this intervention. Taking the agenda forward, SIDBI has entered into MOU with many Regional Rural Banks and Urban Cooperative Banks in consultation with Department of Financial Services, Ministry of Finance, GoI.

The present Technical note is first in the series of posts about MSMEs in India by the programme. The upcoming technical notes will focus on the characteristics of Missing Middle enterprises, financing challenges and way forward.