Financial Source To MSEs In India
                     Financial Source To MSEs In India
Yash Kumar
Writes for search-marketing.in, 
provides information on 
Digital marketing in india to improve 
Digital marketing strategies.
Self-employment is one way of attacking poverty and solving the problems of 
unemployment by the poor people. Having a great business idea is not sufficient; 
to implement that idea one must need capital to set up business and to execute 
the plan. Every entrepreneur doesn’t have enough amounts to invest. For these 
kind of people there is a credit facility called Micro-Credit. The Scheme of 
Micro-Credit is an effective instrument to provide an opportunity of self-
employment and making them credit worthy.
According to the Budget-2009 to facilitate flow of credit at reasonable rates, 
Rs.4, 000 crore provided as special fund out of RIDF to Small Industries 
Development Bank of India (SIDBI). This will incentives Banks and State 
Finance Corporations to lend MSEs by refinancing 50 per cent of incremental 
lending to MSEs during the current financial year.
In India the major sources of finance to MSEs is through the public sector banks 
(58%) and the other sources include emerging source (16%) and Other Banks 
(26%).
Incremental Credits from Public Sector Banks include Rs.38,809 crore, the 
Pvt./Foreign Banks and SIDBI/SFCs include Rs.17,103 crore and Emerging 
Sources (VC-PE, ECB, Factoring, etc.) include Rs.10,883 crore. There by the 
total requirement of micro-credit in the country has been assessed at Rs.66,795 
crore.
Apart from providing finance to develop the MSEs, the government also taking 
some supportive measures like Credit support and Fiscal support. Credit support 
includes the measures like insistence on collateral security, high rate of interest, 
accesses to institutional finance, 10% of total bank credit for MSEs, targets & 
regulatory mechanism, credit guarantee schemes and non-bank finance through 
factoring etc.,
Fiscal support includes not too many direct sops, excise duty exempt upto $ 
600,000 p.a., no service tax upto $ 20,000 of turnover, no IT surcharge for 
income upto $ 250,000, tax concessions by state governments also and states 
exempt / lessen rates for MSMEs etc.,
However, the SMEs still face serious credit crunch and variety of regulations 
from Center, states, and local governments. Still the private sector banks and 
many financial institutions are neglecting this sector.
About Search-marketing 
Search-marketing.in website is a useful resource which caters to 
micro businesses on developments in digital marketing in India. It 
provides information on digital marketing strategies and helps Indian 
micro businesses to establish strong online presence and to leverage 
the Internet for business performance and growth.
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