A Study on Bank Financing to MSME in Ahmadabad city

The MSME sector is an important pillar of Indian economy as it contributes greatly to growth of Indian economy with a vast network of around 30 million units, creating employment of about 70 million, manufacturing more than 6000 products, contributing about 45% to manufacturing output and about 40% of exports, directly and indirectly. This sector even assumes greater importance now as the country moves towards a faster and inclusive growth agenda. Moreover, it is the MSME sector which can help realize the target of proposed National Manufacturing Policy of raising the share of manufacturing sector in GDP from 16% at present to 25% by the end of 2022. Yet, the sector is continually embattled with intractable issues like limited access to credit and institutional finance, technological obsolescence, limited market access, and skilled manpower shortage. For decades, Indian MSMEs operated in a relatively protected business environment but in a globalised business environment like today they would need sizeable investments to access new technologies, scale up operations and foray into new markets. To understand the current scenario of MSME Financing by banks, the researcher carried out a study of 100 SMEs belonging to various industries like auto parts and components, machine tools, pharma and cosmetics etc. of Ahmedabad city. This paper then examines their experience regarding obtaining finance from bank in order to draw useful conclusion. To sum up, the researcher would like to say that in spite of the problems, the MSME sector has grown by leaps and bounds. Micro, Small & Medium Enterprises constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial Dr. Sneha Shukla Associate Professor N. R. Institute of Business Management Ahmedabad w w w. p b r . c o . i n w w w. p b r . c o . i n Pacific Business Review International 32 production and exports. In India too, the MSMEs play a pivotal role in the overall industrial economy of the country.