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Small and medium sector enterprises (SMEs) must focus on costs other than interest, according to K.C. Chakrabarty, Deputy Governor, Reserve Bank of India.
“SMEs are focusing more on interest costs. Instead, they must focus on other costs (inputs),” Chakrabarty said at an event on ‘Strengthening SME Capabilities’ organised by the Bombay Chamber of Commerce and Industry.
According to Chakrabarty, even today, about 90 per cent of the players in the SME sector are financially excluded, that is, they are surviving without any formal source of finance. They need an established and reasonable source of funding to grow further.
“Lack of financing is not an issue… If a bank is not giving credit, it is because the creditworthiness (of the SME) is not proved…Those who deserve bank credit are getting it,” he said.
“Hence, you (SMEs) must have a good project and estimate your debt and cash requirement for the next 18 months….you must create confidence while approaching the banks…be transparent in revealing your problems to the banks,” he said.
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