'SMEs predominantly out of financial system'

'SMEs predominantly out of financial system'

The contribution of small and medium enterprises (SMEs) to India's economy and also exports, most of the SMEs, or about 92 per cent of them do not have access to formal financial sector due to their inability to prepare appropriate financial statements of accounts and lack of technical knowhow.

She appreciated the cluster approach to addressing the problems of SMEs, as it provides them a common platform to address their issues.

This was stated by the regional director of the Reserve Bank of India,Bangalore, Uma Shankar at the  “SME CEO-Knowledge Forum” organised here on Thursday.

The Country Head, SME and Distribution Channel, UTI MF, Bhareth L Ghia,said that SMEs lack awareness on treasury management. 

“They should realise that there are many more options in finance other than banks.”

The Chief General Manager of Small Industries Bank of India (SIBDI), Ram Nath said that SMEs, especially start-ups should practice financial discipline in preparing financial statements of account and various compliance reports in the course of business. 

“The first three years in the life of such enterprises is crucial when they need to put in the right systems in place,” he said.