Credit and Finance for MSMEs: As the digital payments ecosystem continues to grow in the country with businesses and individuals adopting digital instruments such as unified payments interface (UPI) to transact, the MSME Ministry at its end is also ensuring to walk the talk on government’s digital payments initiative. In fact, a majority of transactions done by the MSME Ministry and its attached offices last year have been almost entirely digital.

According to the MSME Ministry, all its offices including Khadi and Village Industries Commission (KVIC), National Small Industries Corporation (NSIC), Office of the Development Commissioner (DC MSME), Coir Board, National Institute for Micro, Small and Medium Enterprises (NI-MSME), and Mahatma Gandhi Institute for Rural Industrialisation (MGIRI) have been digitally enabled.

As per the MSME Ministry’s annual report for the year 2021-22 released last week, 41.36 lakh transactions amounting to Rs 27,292.98 crore were recorded across the MSME Ministry’s six offices during the nine-month period ended December 2021. 87.32 per cent or 36.11 lakh of these transactions were digital, marginally down from 90.19 per cent during the year-ago period of April-December 2020. However, in terms of value, 98.53 per cent or Rs 26891.22 crore worth transactions were done digitally last year, up from 92.02 per cent in 2020. Overall, the digital transaction count last year was also higher from 33.76 lakh transactions in 2020. 

Comments from the MSME Ministry for this story were not immediately available.

MGIRI led the digital transaction tally among the six MSME offices with zero offline transactions. All 659 transactions amounting to Rs 5.552 crore were carried out digitally. In contrast, NSIC recorded 94.9 per cent of its transaction volume digitally followed by 94.4 per cent at NI-MSME, 93.70 per cent at Coir Board, 90.49 per cent at DC-MSME, and 87.02 per cent at KVIC. The highest number of digital transactions 34.12 lakh were carried out at KVIC in comparison to 89,483 digital transactions at DC MSME; 88,640 at NSIC; 17,805 at Coin Board; and 2,089 at NI-MSME.

FinancialExpress.com presents its flagship event The ScaleUp Summit exclusively for MSME owners to learn from each other and grow their business. Please join us by registering here. 

“In line with the recommendations of Committee of Secretaries (CoS) and the guidelines of MeitY, a committee on Digital Payments has been constituted in the Ministry under the Chairmanship of Secretary (MSME) for making the Ministry and its attached offices achieve the successful implementation of ‘Digidhan Mission,” the ministry said in its annual report. 

The digital payments market is expected to grow at a compound annual growth rate of 27 per cent during the FY20-25 period. The growth in retail electronic payment systems including National Electronic Fund Transfer (NEFT), mobile banking, and development of payment acceptance infrastructure is likely to boost digital payment transactions from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young had said in its India Trend Book Report 2021.  

However, a report by CLSA in December last year had pegged the value of the digital payments market in India to jump from $300 billion (Rs 22.35 lakh crore) in FY21 to $1 trillion (Rs 74.52 lakh crore) by FY26. In order to further encourage digital payments, Finance Minister Nirmala Sitharaman in her budget speech earlier this month had proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks.