A Case Study on Performance of Financial Institution in Funding SMEs and Challenges Ahead in India for SMEs

Authors

  • Monika Sharma Department of Management, Amity Business School, Amity University Haryana, Manesar, Gurgaon, Haryana, India
  • Vikas Madhukar Department of Management, Amity Business School, Amity University Haryana, Manesar, Gurgaon, Haryana, India

DOI:

https://doi.org/10.37591/joprm.v6i2.7204

Keywords:

SMEs (Small and Medium-size Enterprises), Financial Institution (FIs), Private sector

Abstract

Small and medium-size enterprises (SMEs) have long been recognized as one of the corner stones of a country’s development. It is thus, important to understand what contributes to their success as well as the difficulties they face. Surveys have shown that the lack of available financing from financial institutions is one of the biggest problems facing small businesses today. In this paper, we try to identify the aspects of obtaining financing that SMEs have most problems with as well as to determine which firm specific factors (such as; type of set-up, size of operation, years in operation and type of industry) contribute to the firms’ ability to borrow. For the firms that applied, the main difficulties faced were the lack of collateral, the lack of proven track records, the lack of proper business plans and the need to show good sales turnover. Actions that may be taken by the SMEs, the financial institutions, the Indian government and tertiary institutions finds that after so much contributions SMES are struggling with financial constraint.

References

Dalberg. Report on Support to SMEs in Developing Countries Through Financial Intermediaries, Nov. 2011.

Bharath P. Prospects and Challenges of SME’S in India, 2009. Retrieved from: scribd: http://www.smechamberofindia

.com/challenges_to_sme_sector.aspx

Growth, internal market, industry entrepreneurship and smes, European commission

Challenges to SME Sector. Retrieved from Small & Medium Business Development Chamber of India, 2008. Available at: http://www.smechamberofindia.com/challenges_to_sme_sector.aspx

https://rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=735

Lemuel Esisal. Financing Options for Small and Medium Enterprises (SMES): Exploring Non-Bank Financial Institutions as an ALTERNATIVE Means of Financing 2009

www.banknetindia.com/banking/btrend04.htm

https://rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=810

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Published

2023-07-27

Issue

Vol. 6 No. 2 (2016)

Section

Articles

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