Insurers and lenders lack standardized tools to verify resilience upgrades undertaken by MSMEs and price the resulting risk reduction

Problem Overview: Identification of risk for insurers and lenders

MSMEs are a backbone sector in India: the latest government and industry sources put their contribution at roughly 31.1% of GDP, 48.6% of exports, and employment of over 328 million people across 74.7 million enterprises ^[1]. On credit, the sector still faces a very large unmet need. Recent policy and market sources put the MSME credit gap at about ~$315.8 billion^[2].

The sector is also facing extreme climate related vulnerability, as MSMEs are often asset-light, under-collateralized, and concentrated in exposed clusters, with limited financial buffers and limited ability to absorb even one major disruption. Climate impacts are already being felt through floods, heat, and infrastructure disruption, and that low access to credit makes adaptation even harder^[3].

In light of these cascading challenges, lenders and insurers need to know which MSMEs are actually exposed, which ones have reduced risk through adaptation, and what residual risk remains. Without a trusted verification layer, they have to price uncertainty conservatively, which limits credit, raises insurance costs, and slows capital flow to the very MSMEs that need it most.

Core Bottlenecks: MSMEs are large, under-served, and difficult to assess; climate risk adds another layer of uncertainty on top of already weak documentation and fragmented data