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Credit availability is a big problem for MSMEs: Expert


Availability of credit is one of the factor affecting the performance of Micro Small and Medium Enterprises, said an expert from Pahle India Foundation.

Speaking with KNN India on the sidelines of a seminar on ‘Definition of MSMEs’ here, Senior Fellow & Head of Research, Pahle India Foundation, Nirupama Soundarajan said “There is a need to look at different sources of credit to address this problem.”

It’s not enough for MSMEs to rely only on banks and as an extension on Non-Banking Financial Institutions (NBFCs) because NBFCs at the end of the day rely on banks only. They don’t get the funding and due to which MSME sector suffers, she pointed.

She stated “NBFC sector is also in crisis as banks have stopped their refinancing.”

She suggested that use of capital markets whether it’s in terms of exchange or in terms of bond markets will have to happen and that will have to be encouraged as an alternative source for financing MSMEs.

On defining MSMEs, she suggested “We should look at turnover primarily because it’s simplest but some kind of sectoral definitions are also necessary to take into account those that would be disadvantaged because of turnover based definition.” (KNN/YV)



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