EMPOWERING THE MSMES IN THE EMERGING MARKETS THROUGH BRIDGING THEIR FINANCE GAP: A STUDY.

MSME’s contribute significantly to the economy and are geographically widely spread in a country like India. The MSME sector has often been termed as the engine of inclusive growth for the promotion of the equitable development in the economy. While the sector is striving to harness its growth potential, it faces a number of challenges like lack of credit, high cost of credit, delayed payments, procurement of raw materials at a competitive cost, lack of access to global markets, inadequate infrastructure facilities, low level of technology modernisation, lack of skilled manpower marketing, revival of viable sick units, so on. Studies on SMEs financing have shown that bank credit is the major source of finance for the SMEs. But the banks and larger non-banking financial corporations have not been able to meet there demand for finance effectively as the banks desire to focus on the track record of any business instead of its future prospects. Large number of MSMEs does not yet have access to credit from the organised financial sector. The objective of this paper is to focus on the vital role played by banking sector in financing MSMEs in the emerging markets; look at some recent trends which highlight the development and significance of this sector towards the Indian economy. This paper also tries to identify the challenges faced by them in raising finance and the different sources of finance apart from banks. This paper attempts to suggest some recommendations to increase the overall credit accessibility for the MSMEs sector. The conclusion arrived through the key issuesaddressed are the creation of a more supportive enabling environment to promote MSME finance and the need for an improved financial infrastructure through deepening the delivery of credit .Conventional financing may not be enough to encourage the MSME sector and there is a dire need for some out of box thinking.