Small and medium enterprises (SMEs) should take steps like properly keeping account books and taking ratings from registered agencies in order to take bank loans hassle free, experts said here on Friday.

These units face major challenges like lack of equity, risk capital and poor access to timely and affordable loans as big investors and banks are usually reluctant to lending SMEs due to the high risks involved in this sector, they said.

“Their own sources of capital are inadequate to increase capacities. We look several things before lending that include the sector in which they are involved, how is the growth rate, are they properly keeping their account books,” Reliance Commercial Finance CEO K V Srinivasan said here at an event.

He said this sector is very important as it contributes about 40 per cent to the country’s total exports and 45 per cent to the manufacturing sector.

In the organised sector, there are 26 million units, which provide employment to almost 60 million people.

“The sector is very important for Indian economy. Around 95 per cent of our customers are in the SME segment. Over the past five years, we have disbursed close to about Rs 30,000 crore loans primarily to SMEs,” he said.

He added that the lenders also look at their succession plans and customer base.

Speaking on the occasion, SME Rating Agency CEO Parag Patki said proper rating to a unit helps in getting loan without any hassles.

“Before giving rating we look at things like what is their market share, customer base and basic governance issues,” Patki said.

Further, Vice-President of Federation of Indian Micro and Small & Medium Enterprises (FISME) Girish Kumar asked the small and medium entrepreneurs to explore new markets in the regions like Africa, Latin America and East Asia to boost their exports.

“Chinese products give strong competition to Indian items.

In the new markets, we do not have strong foothold, so we can explore those areas,” Kumar said.

(This article was published on August 17, 2012)
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