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Importance of SMEs
Banking & Economy
Importance of SMEs
Small and Medium Enterprises (SMEs) are vital for
development of a country
Helps reshaping the productive sectors
Generates employment
Creating an environment for entrepreneurship
Promotes innovation
Importance of SMEs
In Europe, Japan and the USA, 99% of the enterprises
belong to the small business segment
Employment generated through Small businesses is more
than 50% in the EU and approximately 40% in the USA
(World Retail Banking Report 2010)
Importance of SMEs
In Europe (2002-2007), number of SMEs grew by 11%,
and number of employees went up by 9% vis--vis 4% and
3% respectively for the larger enterprises
Globally, SME business accounts almost one-third of retail
Net Banking Income (NBI), though it comprises less than
10% of total retail banking portfolio.
(World Retail Banking Report 2009-10)
Role of Banks
Banks are redefining SME financing by engaging in equity
and quasi-equity investments
Leveraging on their understanding of the SME sector and
their access to capital
trading
Initiatives in India
Initiatives in India
Government has initiated a National Equity Fund (NEF)
NEF provides equity support to entrepreneurs (Tiny & Small
Scale Industries) for:
Setting up new projects
Undertaking Expansion, Modernization, Technology upgradation,
Diversification
Rehabilitation of viable sick units
Initiatives in India
Public Sector Banks have been advised to achieve a minimum
20% y-o-y growth in credit to the SME sector
Capacity-building programs are offered with an objective of
developing competitive small business practices, policies and
strategies.
This includes Training initiatives to achieve the competitiveness of
SMEs through innovation, technology transfer, etc.
Initiatives in India
Prime Minister's MSME Task Force
Constituted in September 2009 by Prime Minister of India
Purpose:
To highlight the concerns and issues relating to MSMEs
To suggest relief and stability measures for MSMEs,
especially in the aftermath of the recent economic
downturn
Initiatives in India
Initiatives by Govt. of India
Few note worthy measures include:
1. Extension of stimulus package, for a further period of
one year, beyond March 31, 2010
2. Creation of a Special fund to be utilized exclusively for
lending to the micro enterprises
3. Providing collateral free loans upto Rs. 100 lakhs under
Credit Guarantee Scheme
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