The proposed new definition of MSME will make 90% of Indifi’s borrowers ‘micro’, says CEO

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The proposed new definition of MSME will make 90% of Indifi’s borrowers ‘micro’, says CEO
Alok Mittal, CEO, Indifi TechnologiesBCCL
  • Alok Mittal, CEO, of Indifi Technologies told Business Insider that the new classification of MSMEs brings 90% of his borrowers in the micro segment.
  • On May 13, Finance Minister Nirmala Sitharaman announced ₹3 lakh crore collateral-free automatic loans will be made available for businesses, including MSMEs
  • The investment limit (to qualify as an MSME) has been raised, the criteria to be called MSME will now include turnover.
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Finance Minister Nirmala Sitharaman on May 13 said that the definition of micro, small and medium enterprises (MSME) will be changed to allow for relatively bigger companies to avail the benefits of cheaper and priority loans.

For Alok Mittal, the CEO of the five-year old online lender Indifi Technologies, new classification of MSMEs will make 90% of his borrowers ‘micro’ organisations.


Indifi is a SME focused lending platform. It offers right-fit credit products for MSMEs, improving the standard of risk assessment, and leveraging the supply chain linkages of MSMEs.

“Earlier we were spanning across micro and small, but now bulk of our companies actually 90% of them will fall under the micro segment. Earlier it was just 50%. So for platforms like ours, it is very beneficial to have the classification as it allows you certain incentives that otherwise companies were graduating out of,” Mittal told Business Insider India.

But there’s a catch...
The definition of MSMEs is getting changed to allow for benefits to continue even if they grow beyond a certain size. The investment limit (to qualify as an MSME) has been raised, the criteria to be called MSME will now include turnover, and the differentiation between the manufacturing and services has been dropped.
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"The government needs Parliament nod to change the definition as it has to amend the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. With Parliament not in session, it will have to bring an Ordinance to implement the announcement," former finance secretary S C Garg told media houses.

Indifi and its peers will gain from stimulus measures too
According to the Finance Minister, ₹3 lakh crore collateral-free automatic loans will be made available for businesses, including MSMEs, along with a 4-year tenure, 12-month moratorium available till October 31, 2020. “This will be fully credit guarantee cover for lenders (both banks and non-banking finance companies) on both principal and interest. This is an emergency credit line for small businesses,” she said during her speech on May 13.

“The government will buy investment-grade (not high-quality) debt of non-banking finance companies to the tune of ₹30,000 crore,” Sitharaman said. It will be a special liquidity scheme, fully guaranteed by the government, that will keep them afloat and it will benefit the housing sector, she explained.

Essentially, it will allow borrowers to stay solvent and tide over the crisis, and therefore, be able to repay the loans taken from the likes of Indifi. “The ₹3 lakh crore lending program that has been announced may not help the lending entities but it will provide survival capabilities to the underlined MSMEs,” said Mittal.

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