Credit Flow To The SME Sector

1630 Words 7 Pages
There are numerous issues involved in strengthening the credit flow to the SME sector. These relate to two broad areas - SME lending operations and other related areas.

SME Lending Operations

Information Centre - Entrepreneurs expect that all data/information required for preparation of project proposal should made available at one place.

Preparation of Project Proposal - Entrepreneurs experience many difficulties in formulating the project proposal which is required for raising assistance from the banks/the government. Data/information requirements are too many and the same are not available at one place. It is a time taking process; hence, entrepreneurs look for certain arrangements to get the required data/information conveniently
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Though the government has enacted the Delayed Payment to Small Scale and Ancillary Industrial Undertakings (Amendment) Act, 1998 many of the units are reluctant to pursue cases against corporate buyers. The Act has made it compulsory that the payment of suppliers should be made within 120 days; otherwise a penal interest has to be imposed. But this rarely happens. Further, while fixing sub-limits to large corporates, care should be taken to earmark some part of the same for the payment of bills to SSI units.

Marketing - Marketing remains the most crucial for the SME sector as some of the units are very small and so is their output individually. Adopting consortium of SMEs as a measure could best solve the marketing problems of the units. Besides, finance for marketing related activities, dissemination of requisite information on demand pattern, futuristic trends etc could be made available by the credit institutions / SSI Industry Associations,
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Some of the reasons are cited below:
Not really in touch with customers through deep dialogue - When an entrepreneur sees a potential opportunity in the market, or dreams up a new idea for a product/service: they retreat to a cave. This is the worst move an entrepreneur can make because complete understanding of your customer is imperative to your success. Entrepreneurs must walk 1000km in the shoes of a customer, not 1 or 10km. Real dialogue with real customers via whatever channel is best for them.
No real differentiation in the market that is lack of unique value propositions - Plenty of noise and chaos for those without uniqueness fighting for the bottom scraps. Most times this is a slow killer of businesses. Barely hanging on, entrepreneurs with some customers and some revenue skimp along for months or even years.
Failure to communicate value propositions in clear, concise and compelling fashion - Many entrepreneurs work hard to discover a point of differentiation then blow it because they do not communicate their message in a clear, concise and compelling manner. I watch many entrepreneurs bleed to death through their failure to

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