The MSME Paradox: Bihar Has India’s Highest Density of Micro-Enterprises and Its Lowest Rate of Formal Credit Access

Bihar has more micro-entrepreneurs per square kilometre than most Indian states. It also has one of the lowest formal credit-to-GDP ratios in Asia. That is not poverty. That is an unserved market.

Let me tell you about Ramesh Prasad. He runs a silk weaving unit in Bhagalpur with six looms, employs his extended family, and turns over roughly ₹18 lakh annually. His products reach Delhi boutiques and occasionally export houses in Varanasi. He has never accessed a bank loan, not once in fourteen years of operation.