SMEs to tap alternate finance sources: CII

The micro, small and medium enterprises (MSME) sector in the country will be increasingly looking at non-traditional sources for financing needs, a business outlook survey conducted by Confederation of Indian Industry (CII) evealed

A CII release said that, 10% of the respondents are preferring capital markets, 12% used credit guarantee schemes while 8% are turning to venture capital as an alternate source of finance.

As many as 52% respondents saw the credit guarantee fund launched by SIDBI for guaranteeing loans up to Rs 50 lakh as a substitute for collateral security.

The survey also found that  high interest rates, collateral requirements of banks and financial institutions as well as bank paperwork, combined with bureaucracy remained key financial obstacles.

Significantly, 34% of the MSMEs said in the survey that they are likely to overtake large companies by 2020. Another 49% felt that by 2015 they will graduate in to medium industries.

Also, 81% of the SMEs, who took part in the survey supported the formulation of a procurement preference policy for the SMEs for procurement by government and government aided agencies.