MSMEs Bounced Back Stronger Since Onset, Of COVID-19 Pandemic: Fintech Lender

Fintech lender NeoGrowth on Tuesday said the MSME sector has emerged "stronger" during the last two years since onset of the COVID-19 pandemic, leveraging the digital payments ecosystem. In its survey, 'MSME Insight Report 2022', the non-banking finance company said the small and medium enterprises have been able to "bounce back stronger" with timely support.

The report is based on a comprehensive assessment of over 40,000 MSMEs from 25 cities across 88 industries analysed by the company from March 2020 to March 2022. The survey, covering MSMEs in both discretionary and non-discretionary demand-oriented businesses, examined the "challenges they encountered during the pandemic, the impact of support measures on their recovery, the shift to digital means of doing business, and their resilience in the two years".

NeoGrowth whole time director and CEO Arun Nayyar said, "Many MSMEs were struggling in 2020-21 due to the burden of loan repayments because of the cessation of demand from consumers. Early on in the pandemic, we identified that MSMEs needed extra support since this was a genuine business disruption. We realised that MSME customers were inherently honest and had the willingness to pay back." The fintech lender handheld them throughout their journey, right from proactively understanding their sentiments at the beginning of the pandemic to supporting them, so that they are "able to bounce back", he said.

The impact on MSME business operations during the early lockdown was due to restrictions on movement, inability to manage cash flows owing to reduced consumer demand, and uncertainty around business recovery post resumptions, the company said. With this feedback, NeoGrowth launched an industry-first initiative, Sanjivni, to "aid the bounce-back of MSMEs", it said. In reality, 46 per cent of MSMEs across India needed financial support to mitigate the impact, with higher demand from non-metros than metros, the report said.

"Financial support availed by non-discretionary MSMEs was less as compared to other businesses. Maharashtra was the worst-affected state during the first wave and close to 50 per cent of MSMEs in Pune and Mumbai needed financial support. "Despite being the first ones to be impacted by the pandemic, MSMEs showed grit. They reinvented themselves by adopting digital solutions for their business, acquiring new skills, diversifying their customer base, and adopting digital lending for their financing needs," the report added.

(PTI)