The SME sector has been gaining an importance with higher contributions to the GDP of the nation. Banks are not able to provide timely and adequate credit to this sector. Banks need to adopt a positive attitude in this regard.
Of late Small and Medium Enterprises (SMEs) have been at the center of all the forums and discussions and are drawing interest of everyone—from Government to politician to banker to the common man. This is because, SMEs play a major and vital role in the development of any economy (irrespective of the level of development), specially in the economies of those countries where poverty, population and unemployment are of great concern.
Though SMEs encompass a wide spectrum of activities, which range from manufacturing to services to trading, there is no single definition of SME in the world. In certain countries, the definition is based on total turnover and/ or number of people employed whereas in other countries it is linked to investment in plant and machinery. Constitution-wise all the sectors can be broadly categorized as given in Figure.
Only very recently in India too, a clear-cut definition of SME has been given. Though the concept of Small Scale Industries has been there since time immemorial, the concept of Medium Enterprises is a new one and through the enactment of MSMED Act Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act), which became effective from October 02, 2006, the Government of India defined, rather reclassified, the industries based on the investment in plant and machinery and not on turnover or employment basis. |
