Uttar Pradesh MSMEs Facing Lack of Institutional Credit – IIA

The Indian Industries Association (IIA) reported that the micro, small and medium enterprises (MSMEs) of Uttar Pradesh had been lacking institutional credit. This was found to be the major hindrance for their growth. As per the all India census of MSMEs, only 62,500 units or roughly 2% of MSMEs in the state had access to institutional financing. The others were either self-financed or got finance through non-institutional sources. In order to meet working capital needs or expand the business, only a few entrepreneurs could arrange funds from personal resources.

In India, banks were reluctant to finance MSME sector because the MSME sector was considered risky. The non-performing assets (NPA) of MSME sector in India are just Rs. 5,000 crore which could be the NPA of one big corporate house.
To uplift the MSME sector, IIA joined with SBI. A four-point proposal was submitted by the IIA to meet the financing needs of the MSMEs. The two partners proposed to organize awareness programmes related to finance or credit and conduct joint studies or surveys in order to ascertain the health of the MSME sector in Uttar Pradesh.

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