New Delhi, Apr 13 (KNN)  Aditya Birla Group Chairman, Kumar Mangalam Birla pressed for better financing to the small and medium enterprises (SMEs) to boost their growth.

“The biggest problem that the SME sector faces today is of financing.  Getting finances from Banks at competitive rates is difficult for them.  Even if there is liquidity in the banking sector, still financing SMEs is difficult and because of that their growth gets stifled,” said Birla in a television interview yesterday.

Access to finance is one of the prime areas of concern for the MSMEs in India.

According to the SMEs, they face severe constraints as far as bank credit is concerned; which forces them to tap alternative financing sources, especially trade credit. However, alternative financing involves higher transaction costs as well as higher interest costs as compared to bank finance.

Also, the constraints faced by MSMEs are non-availability of adequate and timely credit, high cost of credit, lack of availability of venture or risk capital and non-availability of adequate forex loans.

Pointing to the decline in growth of SMEs due to lack of support from banks over financing, Birla said, “Because of the lack of finances, SMEs find themselves supressed. One can hope that the government becomes more proactive and encourages banks to help SMEs.” (KNN)