Finance and Credit
| A major problem confronting the SME business development is the insufficient credit availability. This involves problems faced by SMEs in accessing adequate and timely credit on competitive terms. Though the SMEs have a strong demand for term-financing in order to meet their capital formation and technological up-gradation needs, bank credit currently available to them is of a shorter tenor. |
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Improving credit availability to SMEs include interventions in removal of institutional weaknesses & capacity constraints of banks / FIs affecting credit supply flow to SMEs. So far the efficient functioning of SME credit markets is hampered making credit scarce and thus pulling up the loan pricing levels for them. More efficient SMEs can emerge provided they are more creditworthy and bankable thus making them more competitive. This requires proper financial and operational information dissemination on SMEs in order to make their actual track record more visible to the financing agencies. Better financial and operational information flow would have the effect of increasing the credit flow for SMEs by reducing the risk and costs arising from information asymmetries available to the financing banks / FIs.
The section highlights the banking sector initiatives in facilitating credit to the MSME sector. Besides links to prominent banks & financial institutions the section highlights the schemes & initiatives of other national & international organisations for the sector.