Preferred Sources of Financing by MSMEs and Reasons for Such Preference in Tripura State in North East India

Abstract

Micro, Small and Medium Enterprises (MSMEs) are considered to be growth engine of any economy, and their importance increased tremendously for the developing countries. But it is, equally true that MSMEs face unique challenges. The focus of this study is identifying preferred financing sources and reasons for such preference by the MSMEs in the hilly state of Tripura in North East India. For the study primary data were collected through schedules. The study reveals that owners or managers of MSMEs are not aware about non conventional financing sources. Policy makers should take steps to educate and sensitize owners and managers of MSMEs about those sources. It is also seen that while most preferred source of financing is Banks/Financial Institutions, but MSMEs are still depended upon own fund, fund from Friends and Relatives and Money Lenders for financing their business. Therefore, policy makers should frame policies to involve Banks/Financial Institutions to invest in this sector to make the sector more vibrant.