Financial Institutions Role in Developing of MSME's in India

Micro Small and Medium Enterprises (MSME) form the backbone of the Indian manufacturing sector and have become engine of economic growth in India. The Micro, Small and Medium Enterprises (MSME) sector has been recognized as engine of growth all over the world. The MSME sector plays a very significant role in terms of balanced and inclusive growth and contributes to the process of economic development, equitable distribution of national income and regional dispersal of enterprises by way of mobilization of capital and entrepreneurial skills. Whenever we talk about the growth of MSMEs in India, all the time we should appreciate the role of financial institutions who stood behind this sector and supported in the way it was possible. In development of MSME sector, role played by credit lending institutions is remarkable. Indian Financial Institutions and the Government has a crucial contribution in development and promotion of MSME sector.

This paper closely analyses the growth and development of the Indian MSMEs from opening of the economy in last few years. Another part looks into the present scenario role of financial institutions in overall development of MSMEs across the nation. Paper also aims to evaluate opportunities and challenges in the sector for raising funds through financial institutions which should be considered by policy makers for better results.