Repayment behaviour of Micro, Small and Medium Enterprises towards Commercial Banks in Madurai

Micro, Small and Medium Enterprises (MSME, erstwhile SSI) sector is the backbone of every country's development. They play crucial role in providing large scale employment at comparatively less capital, at the same time help in balanced industrialization of rural and backward areas of the country. The biggest problem faced by the sector is getting adequate and timely finance from banks. However some of the banks show reluctance in sanctioning loan to micro and small enterprises due to the poor repayment history. Hence the need for analysing the pros and cons of repayment behaviour of these enterprises and the problems involved in it is imperative. The current study mostly dependent on primary data collected from the target group by administering a structured questionnaire and secondary data from government agencies. Simple random sampling technique was used to identify the samples in the study area. The primary data thus collected were analysed using various tools to identify the repayment behaviour of micro, small and medium enterprises. It is found that despite considerable increase in quantum of financing to the sector from banking institutions, still considerable gap exists. The repayment behaviour largely depends on the adequacy of loan and the borrowal process which need to be strengthened. Further, Marketing of products and delayed collection from their buyers make the enterprises repayment irregular.