International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

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Access to Finance for Rural MSME’s: Challenges and Solutions

Author(s) Dr. B. Nagendra, D. Ramasekhar
Country India
Abstract Micro, Small, and Medium Enterprises (MSMEs) are a cornerstone of India’s economic growth, contributing substantially to GDP, exports, and employment generation. Rural MSMEs, in particular, play a pivotal role in fostering inclusive development, reducing poverty, and creating livelihood opportunities in underserved regions. Despite their importance, access to finance remains a persistent challenge that constrains their competitiveness and long term sustainability. Structural barriers such as lack of collateral, inadequate financial literacy, and high transaction costs intersect with institutional limitations including risk aversion by banks, limited outreach, and dependence on informal credit channels. Policy fragmentation and low awareness of government schemes further exacerbate financial exclusion. This paper critically examines these challenges and evaluates existing frameworks such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), MUDRA Yojana, and priority sector lending mandates. It also highlights innovative solutions including fintech driven credit scoring, cluster based financing, and digital empowerment initiatives. By integrating case studies and policy analysis, the study underscores the need for multi stakeholder collaboration to bridge financing gaps and unlock the transformative potential of rural entrepreneurship.
Keywords Rural MSMEs, Financial Inclusion, Access to Credit, Collateral Constraints, Fintech Innovation, Cluster Financing, Policy Frameworks.
Published In Volume 8, Issue 2, March-April 2026
Published On 2026-03-30
DOI https://doi.org/10.36948/ijfmr.2026.v08i02.80941
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CrossRef DOI prefix of IJFMR is 10.36948/ijfmr

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