India, July 4 -- Rajesh, a Pune-based manufacturer, watched helplessly as his opportunity to supply critical parts for an order slipped away. Despite his best efforts, he couldn't get a loan of $23,000 ( Rs.20 lakhs) to upgrade his equipment.

With purchase orders in hand, Rajesh approached his bank with confidence. What followed was a labyrinthine process that is familiar to India's micro, small and medium enterprises (MSME) sector. First came the demand for documentation, business registration certificates, three years of financial statements, tax returns, and property documents. Days turned into weeks as bank officials requested more paperwork, such as goods and services tax (GST) returns, bank statements, project reports, vendor agree...