ARE MSMES GOOD ASSETS? - A BANKERS’ PERSPECTIVE

The study has attempted to address the predicaments in the lending scenario to Micro Small and Medium Entrepreneurs. More credit flow to MSMEs is needed but commercial banks reportedly shy away from lending to the sector due to various issues. In light of the covid-19 relief economic packages announced by government of India for the sector, how to ensure that MSMEs are welcomed by banks. The aim of the research is to examine the influential factors that determine the difficulties experienced in lending to MSMEs by banks. This is the first study in the state of Assam in India that compares between MSMEs that have availed assistance of District Industries Centres and MSMEs that have not in getting finance from banks. Information asymmetry, high average cost on loans, hassles with repayment, difficulty in recovery and scarcity of trained manpower are factors that are found to deter banks from lending to the sector.