Micro, small and medium enterprises have been an area of great interest for many researchers. As per reports, credit is a crucial input for promoting growth of the MSME Sector. The review aims to find out the role of MSMEs in development, major hindrances to MSME growth and what influences such hindrance. MSMEs have been revolutionary in development of economies, especially in developing countries. The study has further found financial constraints as a major hindrance to MSME growth. MSMEs find it difficult to obtain credit from formal sector, and banks find it difficult to give credit to the sector. However, formal lending sources are indispensible to MSME development. Reliance on informal sector is not a healthy option for the small sector. The important factors that influence lending towards MSMEs are competitiveness, legal framework, credit policies and lack of information about SME borrowers, firm characteristics and firm size. Various schemes have been introduced over time directed at MSME development which have uplifted the sector but still remains ineffective in many areas. Also very limited studies have been found on unregistered and informal MSMEs as well as government funded organisations dealing with MSME financing.
MSMEs are particularly important for emerging countries, primarily because of their potential in job creation. The MSEs are more than just GDP earners; they are instruments of inclusive growth which touch upon the lives of the most vulnerable, marginalised, women and the most skilled. Being the largest source of employment after agriculture, the MSE sector in India enables 650 lakh people. MSEs also act as ancillary industries for large scale industries. Yet, lack of access to finance is a major obstacle to their growth.In addition to limited development of industries in NER, there is limited availability of data on whatever industries exist there. Around 54% of industrial units are concentrated in Assam among NE states. There were 37,356 registered MSME units in Assam providing employment to 2.05 lakh persons till the end of March 2013. The SLBC data showing the credit disbursals towards MSME sector by commercial banks inAssam do not show a favourable picture. Formal lending sector is always preferred over informal sector by the MSMEs. The study aims to find out the characteristics of MSMEs operating under rural villages in Assam and also the various problems encountered by them in obtaining finance from banks.
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