Manager showing sample of printed fabric to female workers at factory

Electronica Finance

Providing MSMEs with the credit to thrive


MSME Credit



43,000 0


$ 480 0 m

Assets under management

1,878 0

Direct jobs supported

Electronica Finance is a secured MSME lender enabling small enterprise owners to grow their businesses by providing them with access to financing for purchase of livelihood-generating machinery and solar panels, closing the $530B MSME credit gap and aiding in the green transition for industry.

LeapFrog’s investment in Electronica Finance is subject to closing taking place in accordance with the transaction terms.

MSMEs are one of the strongest drivers of economic development for India, contributing 30% of the country’s GDP and 45% of total exported goods but they often have difficulty accessing credit, with a credit gap estimated at $530B1,2.

The sector is also the nation’s largest employer, generating more than 110 million jobs through more than 40 million enterprises3,4.

A major barrier to MSME growth is access to affordable, adequate, and timely credit5. Banks are often unable to finance these businesses, as they rely on traditional documents such as income tax returns and credit scores to assess the credit quality of borrowers. Small businesses and entrepreneurs do not typically have past credit records and have limited documented financial information, given their high dependency on cash transactions6. Further, a lack of collateral can be a significant barrier to credit access – 36% of MSMEs in India say they do not have any collateral to offer to banks7. Alternative MSME credit sources, like unofficial moneylenders, often charge exorbitantly high interest rates.

In addition to stalling economic progress, a lack of MSME credit is also holding up the sector’s transition to renewable energy. While MSMEs account for 48% of the energy demand in the industrial sector, the high upfront cost of rooftop solar projects is a barrier for small businesses with inconsistent cashflow8.

Source: Sattva Knowledge Institute, August 2023.
Source: Sattva Knowledge Institute, August 2023.

Electronica Finance is a pioneer in MSME finance, offering livelihood generating loans to more than 43,000 customers – enabling businesses to expand operations, increase revenue and create jobs.

The company specialises in machinery loans and, with a deep track record of serving customers over the past 30 years, is uniquely equipped to provide credit to the growing MSME sector. While many banks and formal finance providers require lengthy documentation and high collateral, Electronica’s knowledge of manufacturing allows it underwrite loans based on non-traditional data sources, including an assessment of machine quality, personal discussion with customers, and analysis of the customer’s cash flow.

Customers report that the additional investment allowed them to increase their business channels, including opening access to export markets, while also increasing scale, operational efficiency and jobs created. The impact of just one loan can last as much as 10 years based on the average lifespan of a machine and more than half of Electronica’s customers are repeat customers. While 71% of its loans are to enterprises with less than 10 employees, Electronica has supported the transformation of long-term customers into much larger enterprises.

Electronica also provides micro- loans against property to previously excluded emerging consumers. 95% of these loans are disbursed to customers in Tier III and IV cities. These loans have a ticket size of $3,000-6,000, and enable the customers to unlock liquidity for home renovation, weddings, medical emergencies, and other purposes.

The company employs 1,878 staff directly, and through its loans to MSMEs supports a wider 64,400 jobs across 16 states. 88% of jobs are for emerging consumers, earning less than $11.20 a day.

Electronica is also working to support MSMEs to transition to renewable energy. It offers rooftop solar finance products for the manufacturing industry and in 2022-23 the company supported the installation of 23MW of solar capacity. It also supports its customers to transition their machinery to more energy efficient alternatives and – more than half of new machinery purchases supported by Electronica’s finance are energy efficient, with higher productivity and higher quality outputs at lower energy intensity and manpower.

Electronica assets under management has tripled over the last five years Electronica assets under management has tripled over the last five years
Source: Company data, 2024.
Electronica assets under management has tripled over the last five years Electronica assets under management has tripled over the last five years
Source: Company data, 2024.

LeapFrog invested in Electronica in 2024, recognising the value of its finance products to the MSME sector and India’s transition to clean energy.

LeapFrog has a long history of successful credit investments in India and will use its specialist skills and expertise to support the company in several areas, including board participation to drive governance and strategy. LeapFrog will also support the company to diversify sources of liabilities by accessing global pools of capital and help catalyse concessionary pools of capital for its solar energy portfolio.

Building on a track record of investing in innovative finance products for emerging consumers, LeapFrog plans to expand Electronica’s reach further into underserved regions. We will support the company in product development and underwriting, and the growth of its new micro-loan against property product, which is heavily focussed on rural consumers.

Rooftop solar financing is another area of focus for the company, with strong growth in solar loans disbursed over the past three years. The MSME sector is a prime candidate for solar power, with 75% of MSME electricity consumption concentrated during the daylight hours of 9am to 4pm, while solar can help MSMEs to save as much as 20% of their total operational cost9.

We plan to also support Electronica to further align with ESG global best practices, identifying and implementing climate action roadmaps where commercially feasible. Building on industry leading work with another Indian investment Fincare to measure Scope 1, 2 and 3 emissions, LeapFrog will assist Electronica to take stock of its climate impact and support the company with environmental and social training. Electronica is also a 2X eligible investment with a woman CEO, Shilpa Pophale, and 50% women board members. LeapFrog will support the company with best practices in furthering gender action at employment and senior leadership levels.

9 Observer Research Foundation, Evaluating Readiness for Renewable Energy Adoption in India, 2023


Page last updated April 2024.

Profile of Electronica customer
Source: Company data, 2024.
Profile of Electronica customer
Source: Company data, 2024.