The study has been released by Omidyar Network, the impact investing firm established by Pierre Omidyar, the founder of eBay, and The Boston Consulting Group.
"As of 2018, most of the credit demand for $600 billion is being met through informal sources. And therefore, the report indicates that India stands on the cusp of a watershed moment and can serve as a case study for other nations to elevate the role of MSMEs in the economy."
India's 60 million MSMEs are broadly defined as businesses with annual revenue up to Rs 2.5 billion make a significant contribution to its employment and its gross domestic product (GDP).
"With almost 60 per cent of MSMEs borrowing informally today, MSME lending is set for disruption with massive growth in formalisation and digitisation," said Saurabh Tripathi, senior partner and director and Asia-Pacific leader, Financial Institutions Practice at BCG.
"Easier and cheaper credit through digital lending has the potential to trigger a virtuous cycle for formalisation: up to 85per cent of MSMEs could be formal by 2023," he added.
The report was released yesterday.