'Lack of capital a bottleneck for SME development in Bihar'

Lack of low cost capital has been identified as major bottleneck in development of micro, small and medium enterprises (MSMEs) in Bihar. The state government has asked banks to improve their coverage to counter this problem.

Speaking on a conference on MSME financing, organised by Confederation of Indian Industries (CII) in Patna, the Development Commissioner Alok Kumar Sinha has referred on the crucial need of the MSMEs for the development of the state. He said, "The enterprises are more significant in states like Bihar. A vast network of SMEs will attract big investors. It will also be a huge source of employment in highly populated states like Bihar." He added, "The state has almost 2 lakh registered MSMEs units with a total investment of Rs 1,941 crore. However, most of them are either sick or closed due to financial problems. They need fresh capital infusion. However, the banks are not taking interest in their revival." He also emphasised on the need of the further development of MSME sector in the state. "The globalisation has opened up opportunities as well as challenges for the MSMEs. At present the major challenge ahead of them is the access of low cost capital. For this, they need to aware of the recent happenings and new schemes available to them. They also need to expand their horizons to survive and flourish. They need to be technologically updated."

He also asked banks to sensitise on the needs of the MSMEs. He said, "An entrepreneur needs bank finances for business. He needs bank finance for land, plant and machinery and working capital. However, banks are not very much enthusiastic on financing MSMEs in Bihar. Only 30 percent of MSME units in the state have access to bank finance. The banks need to increase their financing, which is crucial for the growth."

Meanwhile, bankers have said that the government, banks and business associations have to work together to solve this problem. Speaking on this occasion, Rakesh Verma, Chief General Manager (Bihar-Jharkhand) of State Bank of India (SBI) has stated the prevailing situation need to be changed. He said, "The credit situation in Bihar (43%) is very poor if compare to the national figure (79%). The prevailing scenario of MSME sector in Bihar needs to be change, MSMEs have its own challenges regarding infrastructure, technology, etc and for this Government, Banks and Associations should work together to take this task ahead. The SBI has a separated dedicated department to assist the budding entrepreneurs and help them in their projects."