The Microfinance Review

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Sustaining Micro Enterprises through Microfinance


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1 BIRD, Lucknow, India
     

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The Micro Enterprises (ME) sector employ approximately 10.76 crore (97%) of the 11.10 crore people engaged in the Micro, Small and Medium Enterprises sector. Given its potential for employment generation and providing livelihood to millions of artisans service providers and small traders, there has been a slew of policy initiatives and enabling provisions by the Government and financial institutions to foster their growth which include setting up specialised institutions like Micro Units Development and Refinance Agency (MUDRA) Bank and credit guarantee funds. It led to spurt in financing them through Pradhan Mantri MUDRA Yojana and Stand-up India. However, the sector faces challenges on many counts including access to information, markets, technology and credit from formal sources. It has specific life cycle needs and characteristics which call for niche products and services. This article examines the enabling environment, state of the sector, the assessed credit gap, life cycle needs of the MEs, factors impeding growth, causes of non-performing assets and suggest measures to overcome them.

Keywords

SIDBI, MUDRA, CGTMSE, NABARD, RBI, PMMY, UAM.
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  • International Finance Corporation (2018): Financing India’s MSMEs - Estimation of Debt Requirement of MSMEs in India, IFC, World Bank Group, Washington D.C.

  • Indian Institute of Management (2016): Finance for Micro, Small, and Medium-Sized Enterprises in India: Sources and Challenges, Working Paper No. 525, IIM, Bangalore.

  • Ministry of Micro, Small & Medium Enterprises (2018): Annual Report 2017-18, Ministry of MSME, Government of India, New Delhi.

  • Ministry of Statistics and Programme Implementation(2018): Economic Characteristics of Unincorporated Non-Agricultural Enterprises (Excluding Construction) in India, Report No. 582, NSS 73rd Round, MOSPI, Government of India, New Delhi.

  • National Bank for Agriculture and Rural Development (2019): Status of Microfinance in India 2018-19, NABARD, Mumbai.

  • National Bank for Agriculture and Rural Development (2019): Annual Report 2018-19, NABARD, Mumbai.

  • Reserve Bank of India (2019): Report of the Expert Committee on MSMEs, June, RBI, Mumbai.


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  • Sustaining Micro Enterprises through Microfinance

Abstract Views: 290  |  PDF Views: 0

Authors

Deepmala Ghosh
BIRD, Lucknow, India

Abstract


The Micro Enterprises (ME) sector employ approximately 10.76 crore (97%) of the 11.10 crore people engaged in the Micro, Small and Medium Enterprises sector. Given its potential for employment generation and providing livelihood to millions of artisans service providers and small traders, there has been a slew of policy initiatives and enabling provisions by the Government and financial institutions to foster their growth which include setting up specialised institutions like Micro Units Development and Refinance Agency (MUDRA) Bank and credit guarantee funds. It led to spurt in financing them through Pradhan Mantri MUDRA Yojana and Stand-up India. However, the sector faces challenges on many counts including access to information, markets, technology and credit from formal sources. It has specific life cycle needs and characteristics which call for niche products and services. This article examines the enabling environment, state of the sector, the assessed credit gap, life cycle needs of the MEs, factors impeding growth, causes of non-performing assets and suggest measures to overcome them.

Keywords


SIDBI, MUDRA, CGTMSE, NABARD, RBI, PMMY, UAM.

References