SMEs have been recognized as a vital component of the domestic economy of a country. Given the special role played by them, SMEs the world over, enjoy due protection from the States through several policy initiatives, financial support measures. However, in the era of globalisation and liberalization, SMEs continue to face increased challenges. Technology upgradation and product innovations required for facing competition are affected for want of financial resources. In the post-reforms era, banks hesitate to increase their exposure to SME Sector, due to statutory regulations and compliance requirements against risk weighted assets. On the policy front, there have been ongoing initiatives, by the Government of India. RBI took several measures for banks’ stepping up their lending to SMEs. Indian Banks, of late, are seen to be more receptive to the industries and willing to lend them, because of business considerations. But, there exists a need for better coordination between SMEs and lenders and creation of mutual trust in each other, which can be achieved through relationship banking. This book attempts to capture all relevant and contemporary issues and challenges relating to SME financing, in the Indian and the global contexts, with a focus on the various policy initiatives of the government to support the SME sector.
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