In an economy filled with conversations around retail credit, start-ups, MSME lending and trends like Buy Now, Pay Later, it is easy to overlook the segment that quietly drives India’s structural growth. Speaking on Simple Hai! with Co-founder and Editor-in-Chief Vivek Law, Pankaj Gupta, Managing Director and CEO of Godrej Finance, laid out a comprehensive view of how MSMEs have evolved over the past decade, the challenges they continue to face, and the structural shifts required to unlock their full potential.
MSMEs: The Real Face of India
Gupta described MSMEs as the “real face of India,” underscoring their role not merely as economic contributors but as employment generators and grassroots wealth creators. Over the past ten years, he noted, India’s economic landscape has undergone a fundamental transformation driven by Digital India, a thriving startup ecosystem and improved regulatory infrastructure. Small businesses that once operated informally are increasingly embracing structured processes, compliance frameworks and global ambitions. Yet, despite this transformation, systemic challenges persist.
The Persistent Credit Gap
When Law questioned if access to capital has improved, Gupta highlighted a significant credit gap between MSME demand and formal supply. Capital exists in the system, but structured finance does not always reach viable enterprises, particularly in smaller towns and semi-urban markets.
Godrej Finance, now in its fifth year, positions itself within a broader “nation-building” philosophy aligned with the values of Godrej Industries across its chemicals, consumer and agro-vet businesses. The firm’s long-term strategy involves going deeper into India’s hinterland to address this financing mismatch. The credit gap, Gupta emphasised, is not merely a funding issue but a structural inefficiency that constrains growth at the grassroots level.
Beyond Lending: The Godrej Nirmaan Approach
To address this gap more holistically, Godrej Finance launched Godrej Nirmaan, a business solutions platform designed to support MSMEs beyond traditional lending. The initiative offers free consultation in logistics and transportation and facilitates access to Amazon Global Selling, enabling small enterprises to integrate into broader supply chains. The strategy signals a shift from transactional lending to partnership-based growth.
Gupta cited cases where enterprises scaled from turnovers of around ten crore to more than five hundred crore through structured financial support and advisory guidance. Such outcomes, he suggested, demonstrate that access to capital must be complemented by capability building.
The Knowledge Deficit
Answering to Law’s question on challenges for MSMEs, Gupta said, a recurring theme in the discussion was the knowledge gap among MSME operators. Many entrepreneurs lack clarity on documentation requirements, collateral norms and the importance of transparent tax filing. This informational deficit restricts access to formal finance.
He also pointed to disparities between metropolitan centres and smaller towns in terms of credit penetration and financial literacy. Bridging this divide requires coordinated efforts across the value chain, including lenders, advisors and entrepreneurs. Professionalisation and succession planning, he added, are essential for sustainable scale. By integrating professional management and involving younger generations, MSMEs could potentially expand 10 to 50 times their current size.
Digital India and the JAM Infrastructure
India’s digital transformation has significantly altered the lending landscape. Gupta credited the JAM trinity, Jan Dhan accounts, Aadhaar identity infrastructure and mobile connectivity, along with the Reserve Bank of India’s regulatory framework, for creating a globally competitive financial ecosystem.
At Godrej Finance, artificial intelligence and machine learning are used to assess borrowers based on digital footprints and cash flow patterns rather than relying solely on physical collateral. This data-driven approach expands access to credit for businesses without traditional assets. Technology also enhances operational efficiency. AI systems monitor thousands of customer service interactions to maintain service quality and compliance standards.
Flexible Products for Real-World Cash Flows
Recognising the cyclical nature of MSME cash flows, Godrej Finance introduced flexible products such as Design Your EMI and Flexi Funds. Flexi Funds operate similarly to an overdraft facility, allowing borrowers to pay only interest during high-expense periods such as festive seasons. Design Your EMI enables customised repayment structures aligned with revenue cycles. Meanwhile, Biz Rewards incentivises responsible credit behaviour through reward mechanisms for timely repayments.
On the broader BNPL trend, Gupta advocated caution. Credit, he stressed, must serve genuine needs rather than lifestyle indulgence. Responsible borrowing, supported by responsible lending, is critical to financial stability.
A Career Shaped by Learning
Gupta’s professional journey reflects both strategic foresight and personal resilience. After early roles at Asian Paints and AkzoNobel, he transitioned into private banking in 2004, identifying the sector’s growth potential during a formative phase in India’s financial services evolution.
His personal mantra, Learn More, Earn More, Grow More and Celebrate More, encapsulates his belief that continuous learning builds credibility, which in turn fuels professional and personal growth.
Lessons from Early Hardship
Long before corporate boardrooms, Gupta worked at a PCO shop from the age of fifteen to support his family while pursuing his education. Earning 450 rupees a month, he reconciled daily accounts and absorbed shortfalls from his own salary. Those formative years instilled discipline, financial prudence and an early understanding of profit and loss statements. He credits his grandfather, who learned to read and write Hindi at 82, as a lifelong inspiration for continuous learning.
Leadership, Health and Balance
Even as a senior executive, Gupta continued formal learning at institutions such as IIM Calcutta and the Wharton School. However, an earlier health crisis triggered by overwork served as a turning point. Today, he prioritises balance through yoga, daily walks and simple home-cooked meals. Originally from Pathankot, Punjab, India, he values family time and remains grounded in the principles of honesty and hard work instilled by his father.
What's Ahead for MSMEs?
The conversation presented a layered assessment of India’s MSME ecosystem. While policy reforms and digital infrastructure have strengthened access to finance, structural challenges remain in education, transparency and professional management.
Through technology-led lending, flexible products and advisory support, Godrej Finance aims to narrow the credit gap and foster sustainable enterprise growth. For Gupta, MSME development is not merely a commercial opportunity but a national imperative. Empowering small businesses with capital, capability and confidence, he argued, is fundamental to India’s economic future.
