The Banking Opportunity in Micro and Small Enterprise Sector
Keywords:
MSE Financing, Make in India, Small Finance Banks, P2P Funding, Information Asymmetry, Mudra Yojana, CGTMSE.Abstract
Micro and Small Enterprise (MSE) is referred to as an engine of growth in emerging markets. They play a major role in creating jobs and generating income in the economy. Despite various initiatives taken by GOI for growth of the sector, YOY growth of MSE credit has been faltering over the years and has touched below 10% as on March 31, 2016. This paper attempts to understand the current opportunities for banks in MSE financing, identify issues and challenges that need to be addressed for creating an enabling environment and finally draw strategy to help the banks to create an eco-system friendly to MSE. Through this study we have identified that risk averse attitude of bank employees, high percentage of NPA in MSE sector and information asymmetry of MSE borrowers are major constraints in MSE financing. Sensitizing, Skill Building and Empowering Employees, Enforcement of Bankruptcy code, Easing CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) scheme and Replacing MSE loan products with Flexible User Friendly Products are key recommendations of the study.Downloads
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