Since, banks, financial institutions, cooperatives still hesitate to lend money to SMEs as per their mandatory requirement of nearly 18-20% of their total lending.
The public sector banks in India are the only hopes for SMEs as it is they who meet their mandatory requirement for lending to SMEs, rest have ignored them.
The credit that they receive is at very high cost and therefore their margins are minimum and input costs increase vis-à-vis their counterparts but the ASSOCHAM Chief pointed out that since over 55% of SMEs have done technological tie-ups with their counterparts to upgrade their production facilities, their input costs would come down in future and supplies to their vendor be maintained at effective cost factor.
All these good factor would have spiraling impact on overall SMEs production facilities and their contribution naturally in every sphere would go up, concludes the ASSOCHAM Paper.
Associated Chambers of Commerce and Industry of India
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