The SME sector in India is large and
burgeoning. It contributes 45% of the industrial output and 40% of
exports, and employs over 40 million people. With rapid economic growth
and the impetus being given by the Government, this sector is expected
to grow at a phenomenal pace, from accounting for 15% of India’s GDP in
2015 to 22% in 2018.
SMEs Need Funding
Despite its enviable growth, the smaller
merchants and retailers face chronic cash shortage. Traditional banking
offers more challenges than solutions to such enterprises. They are
faced with long approval periods, demands of collateral, unsurmountable
eligibility criteria and loan terms that are unsuitable to address
short-term cash flow issues.
