Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India's economy. They contribute nearly 30% of India’s GDP, create millions of jobs, and help in regional development. But despite their importance, MSMEs often struggle to get access to timely and affordable credit. This is where Non-Banking Financial Companies (NBFCs) play a key role.

In this blog, we’ll explore how NBFCs support MSME growth, their role in financial inclusion, and how businesses can take advantage of opportunities with the help of NBFC license registration, RBI PPI license, NBFC account aggregator license online, and RBI P2P lending license.

Understanding NBFCs

NBFCs are financial institutions that offer banking-like services without having a full banking license. They are regulated by the Reserve Bank of India (RBI) and are allowed to:

  • Offer loans and advances

  • Provide asset financing

  • Facilitate investments

  • Operate payment services

  • Act as account aggregators or peer-to-peer lending platforms

NBFCs are more flexible and faster in lending compared to traditional banks, which makes them especially useful for MSMEs.

Why MSMEs Struggle with Traditional Banks

Many MSMEs are informal or semi-formal businesses, which means they often lack:

  • Proper financial records

  • Credit history

  • Collateral or guarantees

Due to this, banks are hesitant to lend to them. Even when loans are approved, the processing time is long, and the documentation requirements are tough. This gap is filled effectively by NBFCs.

How NBFCs Help MSMEs Grow

1. Easy Access to Credit

NBFCs use alternative data to assess creditworthiness. This includes cash flow data, utility bills, and mobile usage. This helps them lend to new businesses or those without a strong credit history.

2. Customized Loan Products

NBFCs offer tailored products like:

  • Working capital loans

  • Invoice discounting

  • Equipment financing

  • Short-term and long-term loans

These products help MSMEs meet their business expansion, inventory purchase, or cash flow needs.

3. Faster Disbursal

Unlike banks, NBFCs use digital platforms and fintech tools for faster processing. Some NBFCs even offer loan approval within 24-48 hours, which is crucial for MSMEs facing urgent financial needs.

4. Serving Underbanked Regions

NBFCs often operate in rural and semi-urban areas, reaching regions where traditional banks have no presence. This helps bring financial inclusion and supports local entrepreneurship.

5. Financial Advisory and Digital Tools

Modern NBFCs help MSMEs track cash flows, maintain digital ledgers, and access credit scores. Some also offer business training and financial literacy programs.

NBFC Licenses That Empower MSME Financing

To provide financial services legally and ethically, NBFCs need to obtain proper licenses from the RBI. Here are some important ones:

NBFC License Registration

This is the main license required to operate as an NBFC in India. It allows companies to offer various financial services like lending, leasing, and investment.

Corpbiz helps businesses with NBFC license registration, ensuring compliance with RBI norms and smooth processing.

NBFC Account Aggregator License Online

With this NBFC Account Aggregator license, NBFCs can act as account aggregators, collecting and sharing financial data (with user consent) from various sources. This helps in credit profiling of MSMEs.

Account aggregation is key to providing data-driven lending decisions, making loans available even for new or unbanked MSMEs.

RBI PPI License (Prepaid Payment Instrument)

This RBI PPI license allows NBFCs to offer wallet services, prepaid cards, and other digital payment solutions. MSMEs can use these tools to manage payments, pay vendors, and accept customer payments easily.

It’s also helpful in reducing cash dependency and making business operations more transparent.

RBI P2P Lending License

Peer-to-peer (P2P) lending platforms connect borrowers (like MSMEs) with individual lenders or investors. NBFCs with this P2P lending license can run such platforms, offering low-interest, collateral-free loans.

MSMEs benefit by getting direct access to funds without lengthy bank procedures.

Benefits of Collaborating with NBFCs

For MSMEs, NBFCs are more than just lenders. They are partners in growth. Here's how:

  • Access to working capital and growth capital

  • Funding even with low or no collateral

  • Digital tools to manage business finance

  • Help in building credit history

  • Advisory services for business planning and financial management

Government and RBI Support for NBFCs and MSMEs

To strengthen NBFCs’ ability to fund MSMEs, the RBI and Indian government have introduced various schemes like:

  • Emergency Credit Line Guarantee Scheme (ECLGS)

  • Refinancing by SIDBI and NABARD

  • Priority sector lending norms

These initiatives aim to provide liquidity support to NBFCs and, in turn, benefit MSMEs with cheaper and faster credit.

How Corpbiz Can Help You Start Your NBFC Journey

If you're planning to serve MSMEs and join the financial revolution, Corpbiz offers complete support for:

NBFC license registration

NBFC account aggregator license online

RBI PPI license

RBI P2P lending license

Compliance and RBI reporting

Our experts assist you through the legal and technical processes so that you can start your NBFC quickly and legally.

Final Thoughts

The role of NBFCs in MSME growth is crucial and transformative. They provide the much-needed credit access, promote financial inclusion, and support economic development across India.

With the right licenses and a vision to serve small businesses, NBFCs can become growth engines for India’s vibrant MSME sector.

FAQs

What is the minimum capital required for NBFC license registration?

A: ₹2 crore is the minimum net owned fund (NOF) required to apply for a basic NBFC license from RBI.

Can NBFCs offer digital payments to MSMEs?

A: Yes, with an RBI PPI license, NBFCs can offer wallets, cards, and payment services.

How does an NBFC account aggregator help MSMEs?

A: It helps collect financial data of MSMEs, making it easier to analyze creditworthiness and offer quick loans.

What is the benefit of P2P lending for MSMEs?

A: It connects MSMEs directly with lenders, allowing easy access to funds without the need for collateral.

Author Profile: Atul Shukla

Atul Shukla is a financial compliance expert with years of experience in NBFC registration, fintech regulations, and startup advisory. He currently leads regulatory services at Corpbiz, helping businesses stay compliant and grow responsibly.