Kolkata SMEs face problems accessing finance: Survey

According to the report, lack of finance options is a major bottleneck for Kolkata-based SMEs. This is holding them back from investing in newer technologies or in improving existing infrastructure.

The survey indicated that for 60 per cent of the city-based SMEs access to finance is a problem. The percentage was the highest from among the five cities covered by the survey.

The survey covered 65 small enterprises whose turnover is in the range of Rs 10 lakh to Rs 20 crore, as well as 25 medium enterprises whose turnover is ranges between Rs 5 crore and Rs 300 crore.

The survey covered Mumbai, Bangalore, Kolkata, Nagpur and Coimbatore, and covered industries like manufacturing (food & beverages, chemical, leather, wood, furniture), professional services, wholesale, retail (electronics, food & beverages, restaurant), IT/ITeS, professional services, construction and real estate.

The survey pointed out that organised financing is dependent on compliance of proper financial documenting which is not a common practice among the smaller Kolkata enterprises.

Some of the criteria which enterprises need to fulfill to qualify for borrowing funds from the finance houses are regular auditing; maintaining a balance sheet and having a good financial track record.

Due to lack of organised documenting and evidence to prove their financial status, the option of availing funds from finance houses is limited.

Also, Kolkata being a slow market, the gestation period between investing in technology and reaping returns from it is longer. As a result, businesses face problems in repaying the loan amount, which further reduces their scope for institutional borrowing.

Moreover, businesses are often unable to convince banks to lend money for IT adoption as they are unable to show the returns from IT investment, the report pointed out. The report also points out that 30 per cent of Kolkata-based SMEs have found transition from a legacy-based system to modern technologies difficult due to employee resistance to change.

Almost half of the Kolkata-based SMEs feel that staff training is a bottleneck, due to inadequate knowledge about the availability of effective training programmes for staff and high costs of such training programmes, wherever they are available.