Bank financing for msmes in India: Trends, problems and possibilities Dr. Lahiri Rajib Assistant Professor, Department of Commerce, Derozio Memorial College Rajarhat Road, Kolkata-700136, West Bengal, India Online published on 13 February, 2018. Abstract In spite of commendable contribution in employment generation, production, export and resource mobilization the Micro, Small and Medium Enterprises (MSMEs) especially the micro firms suffer from insufficient supply of credit from the banking sector. Unconventional nature of operation of the MSMEs, inability to maintain collateral securities, lack of financial discipline, poor loan repayment and excessive defensive attitude of the banks are the major reasons for poor supply of credit. This paper is an attempt to analyse the scenario of bank credit offered to the MSMEs from 2004–05 to 2014–15 and suggest some remedial measures with the help of data collected from the MSME Census Reports, Annual Reports published by the Ministry of MSMEs etc. The study shows that credit gap (difference between the supply of credit and demand for credit) is alarmingly high and the growth rate of bank credit to MSMEs shows a fluctuating trend. To fulfill the credit needs of the MSMEs a proper blend between traditional bank credit systems and unconventional sources of financing (venture capital funds, micro financing, factoring etc) can be very effective. Top Keywords Credit Gap, Institutional Credit, Micro, Small and Medium Enterprises (MSMEs), Non-performing Assets (NPA). Top |