SMEs should focus on investment through equity capital, not debt: SBI Chief

New Delhi, Sept 9 (KNN) The Small and Medium Enterprises (SMEs) in the country must focus on tapping funds through equity and not through debt in order to sustain the financial routine in long run, State Bank of India Chief Arundhati Bhattacharya recently said.

She informed that a big problem that the small and medium sector in the country faces is the lack of equity. It continues to be neglected even after several attempts by different institutions highlighting the importance of the dimension.

Explaining the problem with relying on debt, Bhattacharya asserted that debt for growth capital in the very initial stage of the operations result in burning a hole in the balance sheets of the MSMEs.  She also said that the SMEs must look at the technology sector that has been able to source large amount of equity to support their business and adopt similar models.

This would further help the SMEs increase their market share.

Bhattacharya emphasized that the SMEs need to work on ways to attract investments into their business. In order to get a fair share of investors investments into the business, one needs to prove that there are higher chances of returns as compared to the other similar operations in the market.

The SBI chief was speaking during the SME summit addressing the MSME entrepreneurs in Mumbai. (KNN/ DA)