Missing Middle Enterprise Finance in India: Technical Note Series 4

This technical note discusses different institutional and policy measures for facilitating credit to micro, small, and medium enterprises (MSMEs) in India in the last few decades. It states that the impact of these measures is reflected in the increased flow of credit to MSMEs, particularly after 2009.Reserve Bank of India has prescribed certain targets to banks for lending to the MSME sector. An important development on the policy front has been the inclusion of MSME credit in priority sector lending in 2005 and enactment of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Other steps include Credit Guarantee Scheme for micro and small enterprises (MSEs), Performance and Credit Rating Scheme for manufacturing MSEs, and the MSE Cluster Development Program. Institutional measures include creation of institutions such as:

• Industrial Development Bank of India (IDBI);
• Small Industries Development Bank of India (SIDBI);
• National Bank for Agriculture and Rural Development (NABARD);
• Export Import Bank of India (EXIM Bank);
• State Finance Corporation (SFC);
• State Industrial Development Corporation (SIDC);
• National Small Industries Corporation (NSIC).