Raj K Pathak

Connecting Entrepreneurs with Information,Knowledge & Networking

Only 8% of MSME entrepreneurs get Bank loans

October 11th, 2013

Despite the increase in credit outstanding to the sector, the MSME borrowers feel that the lenders are not doing enough for the MSMEs and are catering more to the needs of the large corporates.

They are right.a RBI study has revealed that only 8 % of MSME entrepreneurs actually manage to get a bank loan for thier business.

Under the Public Policy MSME has been divided in two separate groups known as SME(Small and Medium Enterprise) and MSE(Micro and Small Enterprises). It has been brought out by various studies and working groups that these two groups are facing a number of problems, some of which are common for both and few of are specifically applicable for one of them.

MSEs are specifically facing problem of lack of financial literacy, operational skills, including accounting and finance, business planning, etc. In financial management MSE enterprises do not have the size to support the competence they need. Operational skills, including accounting and finance, business planning, marketing and human resource management, etc. can often pose a challenge and necessitate support for the MSE borrowers. Typically, for instance, they operate with a woefully low productivity of capital and have either too little or too much cash.

SMEs face a number of problems, such as, absence of adequate and timely banking finance, limited capital and knowledge, non-availability of suitable technology, low production capacity, ineffective marketing strategy, identification of new markets, constraints on modernisation & expansion, non availability of highly skilled labour at affordable cost, follow up with various government agencies to resolve problems, etc.

RBI has time and again advisedĀ  Banks to provide financial consultancy / financial management services to their MSE borrowers to give them holistic guidance and support and nurturing them. Banks could set up separate verticals to start special industrial and management consultancy departments to address functional inadequacies and market gaps.

RBI have, on August 1, 2012, advised banks to play a more proactive role in the affairs of their MSE clients by providing them with financial literacy and consultancy support.

At IamSMEofIndia,I have now conceptualised FINANCE MANTRA FOR ENTREPRENEURS -8 event series to be organised across Delhi NCR soon.This series would connect MSE entrepreneurs with information,knowledge and networking.

I hope to see good attendance by MSME entrepreneurs in the series.

Interested to participate,contact:event@iamsmeofindia.com