Lending Approaches of Indian Banks-A Study from SME Perspectives

Abstract

The importance of SME sector in India can be best understood that it contributes 8% in Gross Domestic Product (GDP), 45% of manufactured output, 40% of exports, manufacture over 6000 products and provide employment to around 60 million person through 26 million enterprises as per latest 4th all India census of MSMEs. MSME sector is the second largest employment provider in the country and it is good vehicle to achieve inclusive and distributed growth besides a profitable avenue for the banks in India. The author has undertaken a survey in year 2012-13 to study lending approaches of Indian Banks from SMEs perspectives to examine problems being faced by SMEs in getting finance from banks and also to know viable solutions of identified impediments to improve credit-off take to the sector. Innovation being the focus of paper, primary information has been gathered from entrepreneurs for enhancing credit accessibility to them through innovative approaches & strategies.