By 2025 to accomplish its five trillion dollar economy goal, India needs to close a huge financing gap for its small and medium-sized enterprises (SMEs). Nandan Nilekani recently says the solution to India’s SMEs financial gap can be a crypto investment. There are many significant resources with which to draw in global capital. The Young people of its population, Energy its Tech area, develop Internet connectivity much more. Yet, what hasn’t yet been done is coordinating these resources into a new Multi-trillion dollar cryptocurrency.
Ispirit (The Indian software product Industry RoundTable) said India should tap global cryptocurrencies to fund small and medium enterprises starved of funds; homegrown software products think tank. These allow validated investors through Indian and global exchanges to bridge the SME financing gap of $500 million.
Ispirit authors, led by Fintech specialist Sanjay Phadke said in the blog post on Saturday, “India Could offer a viable path to deploy this new crypto wealth in a controlled manner while solving the SME Financial inclusion.”
“How does India become a $5T economy? we’ll need to close the $250 financing gap for India’s small business by attracting global, risk-tolerant pools of capital and as iSPIRT details, the rapidly growing crypto-economy may be one of the key ways”, Infosys Chairman Nandan Nilekani, Who is a mentor for iSPIRT, wrote on microblogging platform Twitter.
India’s SMEs and Startup Need Financing
As we see India’s population and 60 million businesses, 10 million have GST registration numbers, and most are SMEs. According to the blog, 25% of SMEs have only 25% of the $1 trillion of the banking system’s commercial exposure. Which has resulted in a financial gap of around $ 250-$500 billion. Many SMEs are not able to access capital for growth.
Indian next trillion in GDP growth depends on solving this problem. But the incumbent financial system may not have the resources to fit it. Ever-increasing bank branches in India’s legacy financial system are still slow, costly, and unwidely for borrowers. Moreover, to this high cost of capital for MSMEs, India also has a low baseline financial inclusion level.
Also Read: Indian Government Announces: Corporates Are Required To Disclose Their Crypto Holdings!
The baseline issue is being partially addressed with low-frill Jan Dhan accounts giving banking support to many previously excluded individuals. Another it has said that “India has a unique opportunity to close the SME Financing gap by attracting the new class of global crypto investors, by using everything the IndiaStack team has helped build over the last decade – particularly UPI, Aadhaar, GST, and the informational collateral they generate. This will help connect the trillion-dollar crypto-economy to capital-hungry Indian entrepreneurs.”
In March, the Supreme Court struck down the Reserve Bank of India’s restriction on using banking channels to buy or trade-in cryptocurrency with limited bitcoins trading to only peer-to-peer transactions.
India’ Have Asset Like Youth, Growth, Connectivity, and Informational Collateral
Today India does have assets with which to close the capital gap. The first is a youthful population, a growing economy, and a population of hundreds of millions of new Internet users.
One option is to utilize reliable computerized records to determine whether the business deserves credit or equity investment. India’s GST helps address this by generating invoice and payment information in a format for credit underwriting and risk analysis. For example, one can follow the advancement of parts from a smaller part supplier to an auto component producer to a huge passenger car maker all the way through to distributors, sub-dealers, and retails sales.
India could offer a viable path to deploy this crypto wealth in a controlled manner while solving SME financial inclusion. The inflow of cryptocurrencies from KYC-compliant investors through approved Indian and global exchanges can allow India to enhance SME access to low-cost global capital.
For instance, GST-registered companies receive capital against their issued e-invoice. And other information collateral in a particular account opened via a controlled conduit such as a GIFT City. It is one of India’s favored bridges international market.
As per, Nanadan Nilekani Solution to India’s SMEs financial gap can be a crypto investment. Also, we can say that India has a unique opportunity to close the SME financing gap with a new class of global crypto investors.
Previously, Infosys Chairman and Aadhar architect Nandan Nilekani backed cryptocurrencies as a store of value and considered them as an important asset class.
