What is Development Banks

During the last five decades, the micro, small and medium enterprises (MSME) in the Indian economy have emerged as a dynamic, vibrant segment having a significant contribution towards employment generation and entrepreneurship formation. Despite being an important contributor towards the national output and employment of the economy, the MSME sector continues to face a number of challenges choking its growth, of which, credit availability to these enterprises has become one of the most important issues. The existing literature on small firm financing discusses the issues and challenges from a cross-country perspective. There is a lack of detailed research on implications of country specific factors and financial system on small firm financing. The present essay aims to fill this gap by analysing the extent and nature of credit constraint faced by small firms in the manufacturing sector in India and how technology may change the situation in the coming years.