Financial Inclusion of Microenterprises in the Informal Sector – Missing Middle

This study discusses a pilot project that was designed and implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) in association with Small Industries Development Bank of India (SIDBI) and an MFI, Satin Credit Care Network Limited. The project designed an innovative financial product and delivery model for the upstream apparel supply chain operating in selected industrial areas of Delhi, India.

The study analyzes the pilot's impact on microenterprises and identifies key bottlenecks that constrained the project’s effectiveness. The results of the pilot have been encouraging. Findings indicate that microenterprises involved in the project:

• Have been able to improve their production capacities and production efficiency;
• Have utilized loans to increase their productive assets and to meet their working capital requirements;
• Have been able to hire more skilled workers;
• Have generated higher revenues and profits;
• Have been able to reduce their interest costs;
• Have shown an increase in business confidence;
• Need capacity building support to understand regulatory requirements.