Role of Banks and Financial institutions in Financing of Small scale Industries

Finance is one of the factors occupying an important place in all types of economic activities. The growth of any industry largely depends upon the availability of adequate finance in proper time. Financing o f Small Scale Enterprises is that critical aspect which gains special attention of banks and other financial institutions. It is included in priory sector lending. This paper presents views of different authors about the financing of small scale industries. More specifically, it throws light on the significance of informal (family or personal) and formal (banks) sources of finance at different stages of growth. The literature suggests that both formal and informal institutional support have played a limited role in fostering small entrepreneurial expansion. Although bank finance is valuable in for small industries but small entrepreneurs do not rely on it at the initial stage of business. There is a great scope of research in this field, especially in the Indian context because the SSIs occupies a unique position in the Indian Economy for its contribution towards value addition, employment generation, and the expansion of entrepreneurial base and also for the diversification of the industrial sector.