Despite the economic slowdown, there is large potential for financing the micro, small and medium enterprise (MSME) sector in Punjab, which is the backbone of the state's economy. A Focus Paper prepared by the National Bank for Agriculture and Rural Development (Nabard) has estimated the state MSME sector's need for funds in 2014-15 - including term credit and working capital - at Rs 18,187 crore, a growth of nine per cent over that in 2013-14.
According to Nabard, the incentive-based new Industrial Policy announced by the state government in 2013 for MSMEs would be a catalyst for growth, and further development of the transportation network will facilitate marketing of produce manufactured by such enterprises. This means opportunities for bankers.
Economists say that the MSME sector has emerged as a vibrant sector of the Punjab economy over the last five decades. Micro and small enterprises (MSEs) in the state dominate the MSME sector, accounting for 47 per cent of the sector's output, 60 per cent of its exports and 21 per cent of the investment. MSEs generate 3.8 times the employment generated by medium and large enterprises.
To facilitate the growth of industry in the state, the Industrial Policy of 2013 offers a special package of concessions to the information technology and knowledge-based industries, agro-based industries and food processing. Nabard believes that the policy could attract new investment by MSMEs in these areas.
Punjab also has a network of 5,035 bank branches, comprising 3,841 branches of public sector and private sector commercial banks, 261 branches of three regional rural banks, 825 branches of Punjab State Cooperative Bank and 20 district central cooperative banks.
However, there are also some constraints. For example, the border districts have low potential for industrial activity, with correspondingly less scope for ancillaries due to the absence of large industry.
