Research Nester assesses the growth and market size of global micro lending market which is anticipated to be on account of the growing number of SMEs and growing popularity of mobile banking.
Research Nester’s recent market research analysis on “Micro Lending Market: Global Demand Analysis & Opportunity Outlook 2036” delivers a detailed competitors analysis and a detailed overview of the global micro lending market in terms of market segmentation by provider, end-user and by region.
Growing Income Inequality to drive Global Micro Lending
As income inequality widens, lower-income individuals and small-scale entrepreneurs often find it challenging to access traditional banking services. Micro lending provides an alternative for these underserved groups to obtain credit and financial support.
Micro loans can empower individuals from marginalized or economically disadvantaged groups to start or expand small businesses, which can help in bridging the income gap and improving their economic conditions. Growing awareness of income inequality may lead governments and organizations to implement policies that support micro lending to alleviate poverty and promote financial inclusion. For instance, India is one of the fastest-growing economies in the world but is also one of the most unequal countries. To address this, several government bodies are regulating micro lending.
In India, various government initiatives and schemes, such as the Pradhan Mantri MUDRA Yojana (PMMY) and the Ajeevika Microfinance Yojana (AMY), support a financial framework for expanding micro lending activities. For instance, in 2023, according to the Ministry of Finance, loans amounting to USD 3.2 billion have been disbursed under the Pradhan Mantri MUDRA Yojana (PMMY) till date, and over 470 million small and new entrepreneurs have benefitted from the scheme.
Some of the major growth factors and challenges that are associated with the growth of the global micro lending market are:
Growth Drivers:
- Rising Importance of Women Empowerment
- Growing Government Initiatives to Support Microfinance Institutions
Challenges:
The high default rates and the inconsistent regulatory frameworks across several regions are some of the major factors anticipated to hamper the global market size of micro lending. The lack of a documented credit history significantly hinders creditworthiness, which may result in higher default rates for microlenders.
Microfinance liability can be significantly influenced by the financial regulatory environment in a particular nation as it can create operational complexities for microfinance institutions.
By provider, the global micro lending market is segmented into banks, microfinance institutes (MFIs), and NBFCs (Non-banking Financial Institutions). The microfinance institutes (MFIs) segment is set to garner the highest revenue by the end of 2036 by growing at a significant CAGR over the forecast period. Microfinance institutions (MFIs) give small loans to those people and groups who wouldn’t otherwise have access to financial services. Microfinance Institutions (MFIs) are becoming increasingly popular as a means of granting access to financial services, increasing financial inclusion, stability, and self-sufficiency over the years.
Additionally, Micro Finance Institution (NBFC-MFI) is a financial institution that gives financial credits to the underprivileged groups in society. Furthermore, banks are one of the largest sources of microfinance these days, assisting low-income employees and microentrepreneurs in achieving economic empowerment. Numerous banks provide term loans to a selected set of MFIs and collateral-free microloans to low-income people and/or families.
By end-users, the micro, small, and medium-sized enterprise segment will register substantial revenue. Microlending is viewed as a crucial tool for the growth of small firms, as they often need quicker access to capital to help them develop, expand, and succeed.
By region, the North America micro lending market is estimated to generate notable revenue by the end of 2036. This growth is anticipated by an increased rate of entrepreneurship among women. As per the World Economic Forum, in the U.S., women launched 49% of new firms in 2021, up from 28% in 2019. Particularly, in the U.S., there are currently over 9 million enterprises owned by women. Women who operate as micro and small business owners are becoming a more important target market for microfinance initiatives, as granting access to microfinance is a necessary step toward women’s empowerment.
Additionally, fintech companies are increasingly using artificial intelligence (AI) to improve a range of financial services in the area. Microfinance institutions employ artificial intelligence (AI) to automate loan approval processes and analyze massive data sets for patterns and anomalies.
This report also provides the existing competitive scenario of some of the key players of the global micro lending market which includes company profiling of Accion International, ESAF Small Finance Bank, Ujjivan Small Finance Bank Ltd., Fincare Small Finance Bank Ltd., Fusion Micro Finance Ltd., Bajaj Finserv Ltd., Bandhan Bank Ltd., Bluevine Capital Inc., Equitas Small Finance Bank Ltd., ICICI Bank Ltd., and others.
Source: https://www.researchnester.com/reports/micro-lending-market/6295
