Academic journal article International Journal of Education and Management Studies

Impact of Banker's Attitude on Financial Accessibility of Micro and Small Enterprises in Haryana Region

Academic journal article International Journal of Education and Management Studies

Impact of Banker's Attitude on Financial Accessibility of Micro and Small Enterprises in Haryana Region

Article excerpt

"SMEs are considered to be a major source of entrepreneurial skills, creativity and contribute to economic and social cohesion. They hold the key to innovation which brought innovative ideas and are also emerging as global players, by actively participating in worldwide production and supply chains" (Renner et al., 2008).

In the new planning era of privatization, globalization and liberalization, MSMEs (micro, small & medium enterprises) are losing its importance and are being exploited by the large or big-sized firms. However, it is already a known fact that MSME sector (Micro, small, & medium) plays a differentiating role in industrial and economic development of a nation. Role of micro and small scale sector has been confined to provide value-addition in the production system of large business-houses. The growth cycle of this sector signifies the transition of small size firms to medium size and then to large size scale of firms in a brief span.

Globalization and liberalization is considered to be a major driver that has a significant impact on nearly all the economies in today's scenario. No country in the whole world can rely exclusively on its local resources and capabilities to meet its economic growth targets. There is an intense need of integrating the economies with the global one. As far as MSMEs are concerned, it occupies a significant place in a developing country like India due to its major contribution in employment, production and exports. The Government of India from very beginning of industrialization had assigned a special role to SSI Sector (small scale industrial sector) for their contribution towards the Indian economy. Due protection and promotion was also given to this sector particularly to the small scale sector from the period 1951-1991 till the country adopted a comprehensive policy of liberalization, privatization and globalization. During (1991) MSMEs which were popularly known as SSI were facing stiff competition due to the introduction of economic reforms liberalization, privatization and globalization. This sector is considered to be supporting Indian economy in terms of number of functional units, employment, outputs and exports.

MSMEs are considered to be one of the most sensitive sectors in a country like India. After introduction of the reform measures since 1991, the government of India has introduced promotional policies to increase competition and withdraw various protective policies. Due to globalization MSMEs were also forced to face tough competition from large firms as well as MNCs. Its growth is significant due to its major contribution to employment generation with low capital and technology requirement.

Conceptualization

Definition of Micro, Small and Medium Enterprises (MSMEs)

The Ministry of SSI has undergone many changes in the definition of Small Scale Industries. The investment level and number of employees were the main criteria for the definition. A major change took place in 2006 with the enactment of MSME Development Act, 2006. According to this act, The Micro, Small and Medium Enterprises (MSME) are classified into two categories.

* Manufacturing enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development & regulation) Act, 1951. The Manufacturing Enterprise is defined in terms of investment level in plant and machinery.

* Service enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

Concept of financial accessibility

Access to finance is the ability of firms or individuals to obtain or use the financial services. It includes deposits, credit, payment, insurance, and other risk management and financial services. Those who involuntarily have no access to financial services they are known as unbanked and who have only limited access to financial services are referred to as under- banked. …

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