Working capital is the lifeblood of any business. From large enterprises managing complex supply chains to smaller MSMEs trying to stay afloat in local markets, cash flow challenges are a reality everywhere. 

Even when demand for goods and services is strong, delays in payments, fragmented financing options and operational bottlenecks can slow everything down. Large companies often struggle to optimize cash across multiple suppliers and regions, while smaller businesses face a tougher challenge: limited credit history or collateral that can make accessing timely funding very difficult.

As per a Reserve Bank of India estimate, the credit gap for MSMEs alone is over ₹20–25 lakh crore. This gap, in a way, represents stalled growth, delayed payments and even weakened supply chains.

In this background, Supply Chain Finance (SCF) is a powerful tool to unlock working capital efficiency. For Banks and NBFCs, prioritizing SCF is no longer optional, but imperative. Done right, SCF delivers benefits to all stakeholders: corporates get liquidity, suppliers get faster payments and financial institutions build strong, low-risk lending portfolios.

In this piece, I look at why Banks and NBFCs MUST prioritize SCF for working capital efficiency and how the right strategies & digital platforms can transform outcomes.

The Case for SCF in India

According to the International Monetary Fund (IMF), India is set to retain its position as the world’s fastest-growing major economy, with GDP growth projected at 6.5% in 2025–26. 

However, rapid growth inevitably puts pressure on working capital cycles. Corporates often extend payment terms to optimize cash reserves, while suppliers (many of them smaller businesses) are left managing cash flow gaps. 

This mismatch creates a liquidity bottleneck that slows down the entire value chain. Traditional lending channels haven’t solved the problem due to some key challenges:

Lack of collateral – Over 75% of MSMEs in India rely on informal credit because they do not have sufficient assets to secure formal loans.

Rigid credit assessments – Many small businesses lack the financial history and documentation that banks typically require, making them ineligible for conventional loans.

Inability to meet rising working capital demand – Traditional lenders often have inflexible products & systems which are more tuned to term loan structures. These result in long processing times which cannot keep up with the growing and dynamic financing needs of MSMEs.

Supply Chain Finance addresses these challenges by leveraging the creditworthiness of large corporates to extend financing to their suppliers, in turn, unlocking liquidity where it’s most needed.

Why Banks and NBFCs Can’t Afford to Ignore SCF

The case for SCF is clear: India’s growth story is strong, but the liquidity gap across supply chains remains a persistent challenge. For financial institutions, this isn’t just an opportunity. It is also a responsibility. Banks and NBFCs are uniquely positioned to close this gap, given their reach, capital strength and ability to design solutions that balance risk with inclusion.

Ignoring SCF means leaving value on the table: untapped liquidity, underserved MSMEs and fragile supply chains that could hold back broader economic growth. On the other hand, prioritizing SCF allows lenders to create impact at scale, supporting corporates, empowering suppliers and also strengthening their own balance sheets.

But intent alone isn’t enough. Traditional financing models cannot deliver SCF at the speed, scale and inclusivity the market now demands. That is where robust digital lending platforms with flexible Loan Origination capabilities along with a Credit Business Rules Engine that supports dynamic & agile assessment frameworks, come in. By combining automation, data intelligence and configurable workflows, these PaaS platforms are redefining how banks and NBFCs can operationalize SCF in practice.

Here’s how:

– Strengthening Working Capital Efficiency

SCF directly improves working capital efficiency by shortening receivables cycles for suppliers and giving corporates better control over payables.

What’s changing now is how digital lending platforms are amplifying this impact. Instead of fragmented, manual processes, modern Lending Platforms as a Service (LPaaS) give lenders the tools to design tailored loan journeys, automate origination and configure credit rules with precision. Straight-through processing (STP) ensures seamless execution, while APIs instantly fetch and validate KYC, banking, GST, and bureau data. Beyond this, alternate insights (think like socio-economic profiles, mobile intelligence etc.) enable more inclusive lending.

For banks and NBFCs, this means faster disbursals, sharper visibility into working capital cycles, and far less manual intervention without diluting their risk assessment frameworks & processes. In practice, these platforms don’t just streamline SCF. They expand its scale and reach, in turn, making financing strategies far more effective across supply chains.

– Building Resilient Supply Chains

If the pandemic taught us anything, it is that fragile supply chains can paralyze even the strongest companies. SCF addresses this by ensuring suppliers, particularly smaller ones, have the liquidity to stay financially healthy.

Digital LPaaS strengthens this further by offering configurable workflows and real-time monitoring across sales, credit and operations. Every step from application to disbursement can be tracked and resolved quickly which can improve overall risk management and partner trust. 

When integrated with trade finance solutions, these platforms unlock transactional data that helps lenders make informed decisions while also reinforcing the stability of supply chain ecosystems.

– Tapping into the MSME Growth Story

MSMEs contribute nearly 30% to India’s GDP and 45% to exports. Yet, their working capital needs often remain severely underserved. SCF offers Banks and NBFCs a scalable path to reach this segment without disproportionate risk.

By aligning digital lending models with supply chain anchors, lenders can expand portfolios while avoiding exposure to unorganized credit markets. LPaaS platforms that allow configurable loan journeys, adaptive credit frameworks and end-to-end workflow management make it possible to serve diverse micro-markets effectively while maintaining compliance and operational efficiency.

– Driving Data-Led Insights for Strategic Decisions

Beyond liquidity and workflow improvements, digital LPaaS provide Banks and NBFCs with rich, transactional-level data across the supply chain. This visibility allows lenders to identify trends, assess risk more accurately and optimize SCF programs in real time. Insights from payment patterns, supplier performance and financing uptake enable smarter portfolio management and targeted interventions.

By leveraging these kinds of data-driven insights, financial institutions can fine-tune their lending strategies, anticipate disruptions and offer more tailored working capital solutions, all in all, making SCF not just a financing tool, but a lever for growth and resilience.

The Digital Lending Platform Advantage in Delivering SCF 

The future of Supply Chain Finance in India will be defined by digital-first, ecosystem-driven models. For Banks and NBFCs, the priority must be to align SCF with their broader growth and risk strategies. 

Moreover, SCF is no longer just a financing product, but a competitive differentiator. Large corporates now expect their financial partners to deliver integrated working capital solutions that are fast, seamless and digital. Meeting that expectation requires platforms that do more than automate workflows. They must be configurable, scalable, and intelligent because the future of Supply Chain Finance will be shaped by the quality of digital platforms powering it. 

SCF Lending Hub, a solution created as a partnership between Wonderlend Hub’s InCrediHub and SCFPe, exemplifies this shift. By combining CRM-driven workflow management with lending PaaS, this integrated platform transforms how Banks and NBFCs engage with manufacturers, distributors and retailers. The result is faster activation, smarter risk management, lower operational costs, and the ability to capture the underserved retail market with precision.

In Conclusion

India’s supply chain ecosystem is at a turning point. The convergence of digital platforms, regulatory focus, and economic growth has created a unique opportunity for Banks and NBFCs to redefine working capital efficiency.

Those who prioritize SCF today, backed by robust digital lending platforms, will not only strengthen their own portfolios but also unlock growth across supply chains, empowering MSMEs, corporates and the economy at large