MSME- A Makeover

MSMEs are of national importance but the institutional credit flow to this segment historically has not grown as desired despite initiating several measures by Government of India and Reserve Bank of India, including enactment of MSMED Act 2006 to facilitate promotion and development and enhancement of the competitiveness of Micro, Small and Medium Enterprises and enhance the flow of credit from institutional agencies. During the last fifteen years, although in absolute figures the bank credit has gone up, in relative terms i.e., MSME credit as a proportion of gross bank was falling continuously, except 2007-08 and 2008-09 on account of revised definition of MSMEs.  What is surprising to note is that the growth rate of MSE credit supplied by PSBs has been lower than that of private and foreign banks.  Whatever be the measure, there is unanimity amongst researchers, policy makers and bankers that this sector is deprived of its due share when it comes to bank credit. However, since revised growth strategies stipulated by Government of India, the growth rate has increased substantially by 12.4% in 2011-12 and 20.30% in 2012-13.