A STUDY ON SATISFACTION OF MSMEs TOWARDS BANK FINANCE: AN ANALYSIS OF FUNDING GAP IN INDIA

Micro, Small and Medium Enterprises (MSME) play a vibrant role in the development of aneconomy. They require finance to develop, modernize, diversify and finance their day-to-day business activities. In a current scenario, these are ignored by most banks and financial institutions. Many MSMEs do not hold adequate financial statements and they function in ambiguous forms. In most situations, banks are reluctant to get involved with MSME financing due to credit risk and inadequate financial information. This makes the use of structured credit very challenging for them.The present paper focuses onunderstanding the current situation of MSMEs and explore the factors causing the finance gap and the satisfaction level of the borrowers towards bank finance. Datais collected usinga convenience method of sampling.A structured questionnaire is administered to 97 MSME borrowers from different sectors. Data is analyzed using SPSS.The study reveals that the finance gap is more in Small enterprises and the Asia region has more finance gap than others and the satisfaction of MSME borrowers mainly depend on the behaviour of bankstaff, interest rate and formalities involved in availing the loan. The findings of this study are useful for commercial banks to redesign new schemes and strategies to reduce the finance gap of MSMEs.