SME Banking Conclave 2014

Small and Medium Enterprises (SMEs) are the driving force for the economic growth of India by contributing 45% to industrial output, 40% to exports as well as providing employment to over 70 million people. While SMEs are crucial in integrating any economic system with the society, they face numerous challenges - the most prominent amongst them being the availability of low-cost and timely finances for growth and expansion. At the same time, lack of awareness of financial products and the procedures involved has been another hindrance for decreased credit flowtothe SMEs.

SMEs need adequate finance to meet needs at each stage of their life cycle, from creation through operation, development, restructuring, recovery and beyond. In the scenario where SMEs are faced with toughest competition, what SMEs as borrowers require are rates that are more remunerative than those for Corporate but competitivecompared to them.Atwo-sided approach involving innovative lending from the financial sector and better corporate governance systems in the SME sector can lead to a growing flow of finances to SMEs. To make these enterprises competitive, a number of countries have developed capital market specifically catering to SME sector and have allowedthismarket tocomplementthe banking sector.