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2012-08-18

Experts: SMEs must keep proper account books for easy loans

Small and medium enterprises (SMEs) should take necessary steps like keeping their account books and taking ratings from registered agencies in order to raise hassle free loans from banks, experts said.

Small and medium enterprises (SMEs) should take necessary steps like keeping their account books properly and taking ratings from registered agencies in order to raise hassle free loans from banks, experts said.

Lack of equity, risk capital and poor access to timely and affordable loans are the major issues that SMEs face as banks and other investors are usually reluctant to provide money to SMEs because of high risks present 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," said K V Srinivasan, CEO, Reliance Commercial Finance at an event on Friday.

Highlighting the importance of SME sector, Srinivasan said that 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.

"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 Rs 30,000 crore loans primarily to SMEs," he added.

Also at the event, Parag Patki, CEO, SME Rating Agency of India Ltd. stated that proper rating to a unit helps in getting loan without any hassles.

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

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